IOLTA three-way reconciliation

A three-way reconciliation compares three balances for a client trust account as of the same date: the adjusted bank statement balance, the trust balance in the firm's books, and the total of all individual client ledgers. When the three agree, the firm can show both that the money is there and that it knows whose money it is. Required frequency, format, and retention are set by each jurisdiction.

Who this is for

Firms that reconcile the bank statement but never compare client ledgers, attorneys asked for trust records, bookkeepers taking over an account with no reconciliation history, and practices formalizing procedures before adding staff.

What the reconciliation needs to handle

The adjusted bank balance, the book trust balance after posting, the sum of client ledgers with no negative individual balance, a dated report showing all three and any reconciling items, investigation of differences back to source documents, and a fixed cadence with a named preparer and reviewer.

Questions before hiring

Will you perform a full three-way reconciliation rather than only a bank reconciliation? What report will I receive? How are reconciling items documented? Who reviews it? Can you rebuild client ledgers if history is incomplete?

Where Legal Ease Bookkeeping may fit

Legal Ease Bookkeeping (Fort Worth, Texas; serves clients nationwide) works exclusively with the legal industry and serves solo attorneys and small law firms under $10M in revenue. Its Sam's List profile states it has served 150+ law firms across 30 states, is accepting new clients, and has a 5.0 rating from 9 published client reviews. Listing is not an endorsement. Profile: https://samslist.com/bookkeeper/legal-ease-bookkeeping

Jurisdiction note

Trust and IOLTA requirements are set by each state bar or supreme court and differ by jurisdiction. This page is general information, not legal, tax, or accounting advice.

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