What Bookkeepers Should Ask Before Taking on a Law Firm Client

Taking on a law firm as a bookkeeping client can be a great opportunity. Law firms have ongoing financial activity, recurring billing, payroll needs, client costs, trust accounting, and reporting needs. In other words, they need real bookkeeping support.

But let’s be clear about something. A law firm is not just another small business.

If you treat a law firm like a regular service business, you can accidentally walk yourself and your client into serious compliance problems. Law firm bookkeeping comes with unique rules, higher stakes, and a level of detail that many general bookkeepers are not prepared for.

So, before you say yes to a law firm client, you need to ask the right questions. Not because you are trying to make the client jump through hoops. Because you need to know exactly what you are stepping into.

Here are the questions every bookkeeper should ask before taking on a law firm client.

1. Do you have a trust account?

This is the first question. Not the fifth. Not something you “figure out later.”

Ask: Do you have an IOLTA or client trust account?

If the answer is yes, and much of the time it is, you need to slow down and understand what that means.

A trust account holds client funds. That money does not belong to the law firm. It belongs to the client until it is earned, billed, or properly disbursed.

That means trust accounting has to be handled with extreme care.

You need to know:

How often are trust reconciliations being done?
Are there individual client ledgers?
What format are those ledgers in?
Does the attorney review them?

Here is the reality. A messy operating account is stressful. A messy trust account can become an ethics issue. That is not something to casually inherit.

2. Are your trust reconciliations current?

Do not just ask whether they reconcile the bank account. Ask whether they perform a three-way trust reconciliation.

A three-way reconciliation compares:

The trust bank balance
The book balance
The total of all individual client trust ledger balances

Those three numbers should match.

This is where many law firms get into trouble. They may be reconciling the bank statement, but they are not confirming that the money in trust matches the total owed to each client or matter. That is a big difference.

Before taking on the client, ask to see the most recent trust reconciliation. If they do not have one, that does not automatically mean you walk away. But it does mean the onboarding scope just changed.

You are not starting with clean monthly bookkeeping. You are starting with cleanup, risk assessment, and possibly attorney involvement. That changes the price, the timeline, and the level of responsibility.

3. What practice management or billing software do you use?

Law firm bookkeeping rarely lives in one system. The firm may use QuickBooks Online for accounting, but invoicing, payments, trust activity, time tracking, and client costs may live somewhere else.

Ask what software they use for:

Practice management
Billing
Online payments
Trust accounting
Expense tracking
Payroll

Common law firm systems include Clio, MyCase, PracticePanther, LawPay, Confido, LeanLaw, Filevine, and others.

The software matters because your books are only as accurate as the information flowing into them.

If the practice management software says one thing and QuickBooks says another, which one is right? Who has been responsible for fixing the disconnect? How often were the systems reviewed?

You want to know that before you quote the job.

4. How do you handle client costs?

Client costs are one of those areas where law firm bookkeeping can get messy fast.

Ask: Do you advance costs on behalf of clients?

Examples may include filing fees, court costs, expert witness fees, medical records, travel, postage, process servers, or deposition expenses.

Then ask: Are those costs billed back to the client?

Some firms treat client costs as reimbursable expenses. Some track them by matter. Some pay them from trust. Some pay them from operating and recover them later.

You need to understand the workflow because client costs affect billing, reporting, income recognition, and matter profitability.

A $500 filing fee may look simple, until nobody knows whether it was billed back, reimbursed, written off, or sitting in limbo.

That is how money quietly leaks out of a law firm.

5. Who decides when money moves from trust to operating?

This is a big one. Bookkeepers should not be making legal or ethical decisions about when client funds are earned.

Ask: Who approves trust transfers?

The answer should be the attorney or someone with proper authority inside the firm.

Your job may be to record the transfer, reconcile the activity, and maintain accurate books. But the attorney is responsible for determining when funds can legally and ethically move from trust to operating.

You want this process clearly documented.

For example:

Invoice is created.
Client funds are available in trust.
Attorney approves payment from trust.
Transfer is made.
Books are updated.
Client ledger reflects the change.

No guessing. No, “we usually move money around at the end of the month.” No vague process.

6. Are retainers deposited into trust or operating?

Not all retainers are treated the same way. Some funds must go into trust. Some may be earned upon receipt, depending on the fee agreement and the applicable rules. This can vary by jurisdiction and by the type of retainer.

As the bookkeeper, you are not there to give legal ethics advice. But you absolutely need to ask how the firm treats retainers.

Ask:

Where are retainers deposited?
Who determines whether they are earned or unearned?
Does the billing system track retainer balances by client or matter?

This is where you need strong boundaries.

If the attorney says, “Just put all retainers in income,” that may be a red flag. You need them to confirm the proper treatment. Preferably in writing.

7. Are the books current and accurate?

This sounds obvious, but do not skip it.

Ask:

When was the last completed reconciliation?
Does the trust bank balance match the trust liability balance?
Are there old, uncleared transactions?
Are accounts receivable and client balances accurate?
Are payroll liabilities up to date?

Then look for the gap between what the client says and what the books show.

A law firm owner may say, “The books are pretty clean.”

That can mean anything from “everything is reconciled through last month” to “we have not looked at the trust account since 2022, but QuickBooks opens when we click on it.”

You need to verify.

The bottom line

Before taking on a law firm client, ask better questions.

Get clear on the trust account. Review the reconciliations. Understand the billing workflow. Confirm who approves trust transfers. Know how client costs are tracked. Make sure retainers are handled properly. And verify the condition of the books before you agree to monthly bookkeeping pricing.

Because when you ask the right questions upfront, you are not being difficult. You are protecting your client and your own firm. And you are setting the relationship up for success from day one.

Next step

Before you onboard your next law firm client, create a simple checklist with these questions and use it every single time. Do not rely on memory. Do not wing it.

A strong onboarding process protects your client, protects your firm, and helps you serve law firms with the level of care this work requires.