Most attorneys worry about properly handling client money. Not only is mishandling of trust account funds among the leading sources of bar disciplinary action, but the concern is most acute among solo and small firm attorneys. Often, smaller firms lack the accounting staffing, structure, and software of larger competitors, and are often less able to withstand a financial accident.
The best way for a small firm to overcome these hurdles is to embrace a user-friendly, integrated solution where matter information and accounting data coexist in a single software product.
CosmoLex Helps You Follow the Rules
Attorneys often joke that they attended law school instead of business school because they hate math. Unfortunately, every business involves math, and the joke may have the last laugh. Law firms confront two types of accounting: general business accounting and client trust accounting (also called IOLTA). And the rules and regulations for the two are completely different. Many accountants and bookkeepers themselves don’t know the IOLTA-specific concepts and compliance requirements.
Good trust accounting software prevents you from making errors. In the same way that law practice management software (LPMS) understands the concept of a “matter” (i.e., contacts plus appointments plus documents, time entries, expenses, notes, etc.) in a way that Outlook and Gmail do not, legal-specific accounting tools understand IOLTA requirements in a way that general business accounting packages do not.
Those respective understandings reinforce one another in CosmoLex, which combines matter management and accounting in one product. A single source of truth makes it easier to avoid trust accounting pitfalls like comingled funds, IOLTA overdrafts, duplicate check numbers, and other common errors.
CosmoLex Helps Make Trust Accounting Painlessly Paperless
Manual accounting is both time consuming and error prone. No matter whether you’re using a siloed piece of software, a series of Excel spreadsheets, or even paper ledger books, CosmoLex represents a tremendous step forward for accuracy, efficiency, and security.
A matter could have many moving parts involving a trust account. A single activity could impact client billing, trust, and operating accounts. For example, the firm invoices the client (client billing), then disburses trust funds to pay the invoice (trust account), and transfers those earned funds for its use (operating account). Recording this series of events correctly in multiple disconnected paper or electronic systems not only consumes time better spent elsewhere, but it also risks bookkeeping inaccuracies that become harder to find and correct the longer they linger.
With CosmoLex, you can:
- Effortlessly manage single client ledgers or multiple trust accounts with separate ledgers for trust and operating accounts;
- Apply trust funds to individual or bulk invoices with ease, including automatic transfers from trust to general accounts, and generate disbursement checks directly from the system; and
- Efficiently manage and disburse third-party lien claims, import electronic bank statements, and auto-reconcile your books to save time and reduce errors.
CosmoLex’s integrated solution ties together matter activity and time tracking, invoicing, and accounts receivable. All pertinent data is always at your fingertips. This linkage reduces the risk of mistakes and omissions. It also saves time that might otherwise be spent tracking down and fixing discrepancies between an LPMS and a synced accounting program, to say nothing of spreadsheet files or ledger books.
CosmoLex Helps Reconcile You to Good Trust Accounting
Your jurisdiction’s governing body likely has rules regarding trust account reporting requirements. The more manual, disjointed, and infrequent your trust account bookkeeping and oversight, the more time consuming and painful any required reporting will be.
In many jurisdictions, your bookkeeping ledgers and bank statements must match to the penny on a daily basis. As attorneys, we have a fiduciary responsibility to handle client funds responsibly, and that includes the ability to comply timely with IOLTA tracking and reporting regulations.
CosmoLex performs three-way reconciliation reporting with just one click and provides a full set of trust record-keeping and financial reports to ensure compliance and transparency.
By using CosmoLex, a purpose-built, integrated solution, you stay continually informed on the status of your IOLTA account, eliminating the uncertainty, stress, and lost time that could otherwise result from weeks or months of lax trust account reconciliations.
Get Started with CosmoLex and Make Good Bookkeeping Easier
CosmoLex’s LPMS solution with integrated accounting offers three core, interconnected features to keep you compliant:
- Built-in safeguards to prevent errors and missteps within the firm;
- Automated bank account reconciliation to ensure that the firm and the bank match; and
- Comprehensive reporting to know the health of the business and meet compliance needs.
Trust accounting with CosmoLex is seamlessly integrated into the legal software, operating alongside law practice management, billing, and general accounting functions.
CosmoLex ensures that your law firm’s trust bookkeeping is managed automatically, in real-time, and in the background. With CosmoLex, trust accounting becomes a streamlined, reliable process, allowing your firm to focus more on legal practice and less on financial administration. Learn about CosmoLex’s trust accounting tools, and its other powerful LPMS features, by visiting their website.
Last updated August 23rd, 2024
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