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Trust Accounting Software

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Clio logo
 
Clio is a cloud-based legal practice management solution suitable for small to large law firms. The platform enables legal firms to track important deadlines, manage cases and documents and bill and collect from clients. The time... Read More
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Clio is a cloud-based legal practice management solution suitable for small to large law firms. The platform enables legal firms to track important deadlines, manage cases and documents and bill and collect from clients. The time... Read More
 
PracticePanther Legal logo
 
PracticePanther Legal Software is a legal management solution for small to medium-sized practices specializing in areas including bankruptcy law, personal injury, divorce, estate planning, litigation, criminal law and many more. The... Read More
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PracticePanther Legal Software is a legal management solution for small to medium-sized practices specializing in areas including bankruptcy law, personal injury, divorce, estate planning, litigation, criminal law and many more. The... Read More
 
AbacusLaw logo
 
Abacus Law is a case automation software for legal practices. The system works as a practice management tool and scales to grow with a business. This system allows users to automate deadline management through the use of rules based... Read More
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Abacus Law is a case automation software for legal practices. The system works as a practice management tool and scales to grow with a business. This system allows users to automate deadline management through the use of rules based... Read More
 
MyCase logo
 
A recent winner of the Silver Stevie Award for Best Customer Service, MyCase is a unique and intuitive web-based system created expressly for lawyers. Designed originally to help facilitate better communication between attorneys and... Read More
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A recent winner of the Silver Stevie Award for Best Customer Service, MyCase is a unique and intuitive web-based system created expressly for lawyers. Designed originally to help facilitate better communication between attorneys and... Read More
 
Smokeball logo
 
Smokeball is a cloud-based legal practice management for small firms that can be used in a variety of specialities. Key features include case management, contact management, calendaring, time tracking, billing and accounting.  Smokeball... Read More
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Smokeball is a cloud-based legal practice management for small firms that can be used in a variety of specialities. Key features include case management, contact management, calendaring, time tracking, billing and accounting.  Smokeball... Read More

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SmartAdvocate logo
 
Conceptualized by a partner at a personal injury law firm, SmartAdvocate is a legal management platform that offers flexible deployment options and a modular suite of applications.  In addition to case management, attorneys and their... Read More
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Conceptualized by a partner at a personal injury law firm, SmartAdvocate is a legal management platform that offers flexible deployment options and a modular suite of applications.  In addition to case management, attorneys and their... Read More
 
LeanLaw logo
 
LeanLaw is a cloud-based timekeeping and billing solution for small to midsize legal practices. Key features include time tracking, billing and invoicing, financial reporting and Quickbooks integration. A free mobile app is also available... Read More
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LeanLaw is a cloud-based timekeeping and billing solution for small to midsize legal practices. Key features include time tracking, billing and invoicing, financial reporting and Quickbooks integration. A free mobile app is also available... Read More
 
BQE Core Legal - Time, Billing, and Accounting logo
 
BQE Core Legal is a cloud-based solution that offers integrated accounting, time tracking, and billing and invoicing. It can support the operations of a variety of law firms including litigation, corporate, family, tax, immigration... Read More
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BQE Core Legal is a cloud-based solution that offers integrated accounting, time tracking, and billing and invoicing. It can support the operations of a variety of law firms including litigation, corporate, family, tax, immigration... Read More
 
HoudiniEsq logo
 
HoudiniEsq is a law practice management soluiton for law practices of all sizes. This software can be installed both on-premise and in the cloud. HoudiniEsq features case budgets, time tracking, case and matter management, full text... Read More
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HoudiniEsq is a law practice management soluiton for law practices of all sizes. This software can be installed both on-premise and in the cloud. HoudiniEsq features case budgets, time tracking, case and matter management, full text... Read More
 
CosmoLex logo
 
CosmoLex is a cloud-based legal management software that offers advanced features and fully-integrated applications for an all-in-one solution. Named TechnoLawyer Newswire’s Top 25 Product of 2014, it includes time tracking, billing,... Read More
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CosmoLex is a cloud-based legal management software that offers advanced features and fully-integrated applications for an all-in-one solution. Named TechnoLawyer Newswire’s Top 25 Product of 2014, it includes time tracking, billing,... Read More

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Rocket Matter logo
 
A Legal Management system designed for small and mid-sized practices, Rocket Matter provides a way to improve invoice accuracy, and reduce the time it takes to generate invoices. The system also provides document management, so that... Read More
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A Legal Management system designed for small and mid-sized practices, Rocket Matter provides a way to improve invoice accuracy, and reduce the time it takes to generate invoices. The system also provides document management, so that... Read More
 
Actionstep logo
 
Actionstep is a cloud-based legal practice management solution designed for growing and midsize firms. The integrated solution offers tools for managing cases, billing, invoicing and accounting as well as enables businesses to automate... Read More
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Actionstep is a cloud-based legal practice management solution designed for growing and midsize firms. The integrated solution offers tools for managing cases, billing, invoicing and accounting as well as enables businesses to automate... Read More
 
MerusCase logo
 
MerusCase is a legal practice management system offering an integrated platform of solutions for U.S. law firms. The system is HIPAA compliant and offers document management, timetracking and billing, calendaring and communication... Read More
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MerusCase is a legal practice management system offering an integrated platform of solutions for U.S. law firms. The system is HIPAA compliant and offers document management, timetracking and billing, calendaring and communication... Read More
 
App4Legal logo
 
App4Legal is a law practice management solution designed by lawyers for lawyers. A Web-based system, it is available for server or cloud deployment and offers a mobile app for anywhere, anytime access. With App4Legal, users can... Read More
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App4Legal is a law practice management solution designed by lawyers for lawyers. A Web-based system, it is available for server or cloud deployment and offers a mobile app for anywhere, anytime access. With App4Legal, users can... Read More
 
Coyote Analytics logo
 
Coyote Analytics is a comprehensive financial software system specifically built to meet the needs of law firms that is available in both web-based and on-premise formats. The program includes modules for billing, accounting, and administration,... Read More
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Coyote Analytics is a comprehensive financial software system specifically built to meet the needs of law firms that is available in both web-based and on-premise formats. The program includes modules for billing, accounting, and administration,... Read More

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LegalTrek logo
 
LegalTrek is comprehensive legal practice management solution designed for boutique and midsize law firms worldwide. Focused on project management and billing, LegalTrek helps structure and improve day-to-day operations so firms can... Read More
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LegalTrek is comprehensive legal practice management solution designed for boutique and midsize law firms worldwide. Focused on project management and billing, LegalTrek helps structure and improve day-to-day operations so firms can... Read More
 
ProLaw logo
 
Suitable for mid-size and large legal practices, ProLaw by Thomson Reuters Elite helps to streamline key parts of the law firm management process. The financial management application automates the time tracking and expense management... Read More
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Suitable for mid-size and large legal practices, ProLaw by Thomson Reuters Elite helps to streamline key parts of the law firm management process. The financial management application automates the time tracking and expense management... Read More
 
LawGro logo
 
LawGro is a cloud-based business management solution for small to midsize legal practices. Key features include contact management, case management, task management, time and expense tracking, billing and invoicing, document management,... Read More
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LawGro is a cloud-based business management solution for small to midsize legal practices. Key features include contact management, case management, task management, time and expense tracking, billing and invoicing, document management,... Read More

 

Buyer's Guide

by Lisa Hedges,
Content Analyst
Last Updated: November 14, 2017


Trust accounting is a complex, niche field that spans the financial and legal industries. Dedicated software can make trust accounting easier to handle, but successful implementation requires an understanding of specifically how that software can help lawyers, accountants and other parties manage trust funds and the assets that those funds produce.

This buyer’s guide will not only serve as a primer on what trust accounting is, but also explain what specific things software buyers should look out for if they’re in the market for a trust accounting system.

Here’s what we’ll cover:

What Is Trust Accounting Software?
What Is Legal Trust Accounting?
Common Features of Trust Accounting Software
What Type of Buyer Are You?
Benefits and Potential Issues
Market Trends to Understand

What Is Trust Accounting?

In its largest sense, the term "trust accounting" refers to the financial management of trust accounts—accounts in which a trustee holds funds for some specific purpose.

When talking about general trust accounting, though, we are more specifically referring to accounts created as a part of estate planning (the dispersal and management of a person's assets after their death).

Adding to the confusion is the fact that this form of trust accounting, or "fiduciary accounting," has a counterpoint in the legal profession. Although legal firms are frequently involved in trust accounting for estate planning and other purposes, "legal trust accounting" refers to a different, separate practice.

What Is Legal Trust Accounting?

Lawyers create legal trust accounts for a few reasons, including:

  • They have been given advance fees (such as retainers) by clients
  • They are holding funds for clients in connection with payment of a settlement
  • They are holding client funds as a fiduciary for that client

By law, these accounts must be separate from the lawyer's own personal or business account, making legal trust accounting an essential part of legal practice and ethics.

In many cases, these trusts are eligible for the IOLTA (Interest on Lawyers Trust Accounts) program, which takes the interest from lawyers' trust accounts and uses it to provide legal aid on civil matters to low-income families and individuals. All 50 states currently have an IOLTA program.

According to the program's website, "A lawyer who receives funds that belong to a client must place those funds in a trust account separate from the lawyer's own money. Client funds are deposited in an IOLTA account when the funds cannot otherwise earn enough income for the client to be more than the cost of securing that income. The client—and not the IOLTA program—receives the interest if the funds are large enough or will be held for a long enough period of time to generate net interest that is sufficient to allocate directly to the client."

One of the main features of legal trust accounting software is automated management and accounting of those IOLTA funds, making lawyers the primary customers of trust accounting software vendors.

The products we'll be discussing in this guide are specifically geared toward legal trust accounting, though we will be referring to it as "trust accounting" for simplicity's sake.

Common Features of Trust Accounting Software

Different trust accounting systems will have different features, depending in part on how integrated they are with a more robust suite of legal and/or accounting software. The most typical features are explained in the following chart.

Financial reporting Create financial statements tracking funds across multiple trust accounts. Lawyers must be able to produce a report showing how funds in a trust account are used. This also allows you to reconcile trust accounts every month and be audit-ready should the need arise.
Billing and timekeeping Almost all trust accounting software integrates with (or comes in a suite with) more generalized legal billing/timekeeping software that allows for easy creation of invoices and payment collection, while squaring those exchanges with trust accounts.
Accounting integration Some trust accounting software integrates with general legal accounting software, so all financial records are housed in the same database and trust accounts match up with overall financials.
Client ledgers Track the ledgers of multiple accounts for multiple clients, avoiding the mistake of commingling accounts. Organize by legal matter or client to customize according to your preference.
IOLTA accounting For accounts that qualify, track the interest accrued, make automatic payments into the program and make sure you are abiding by the IOLTA rules of your state.
Trust account automation Some systems will apply trust monies directly through automatic billing, keeping the accounts balanced without the need for manual transactions.
Compliance Many states have laws that regulate how attorneys can maintain lawyers' trust accounts. Software can help you make sure you follow all relevant local and national legislation.
Accountant/bookkeeper access Some trust accounting systems provide free account access for an external financial advisor, so that you can have your chosen expert double-check your compliance.

What Type of Buyer Are You?

Although lawyers and law firms are the primary buyers of this type of software, they are not the only parties interested in legal trust accounting. Other buyers might include: bank trust departments, independent trust companies, accountants/CPAs, family offices, guardians, foundations and nonprofit organizations.

However, most buyers will be lawyers and law firms, falling into one of the following three categories:

  • Solo law practice. These are practices with only one attorney, who may or may not also have an outside bookkeeper. More frequently, however, these attorneys will keep their own records, and thus, trust accounting software will be crucial to monitor any trust accounts and abide by all state and federal regulations. These buyers will most likely have a need for other legal software functions, with trust accounting as part of a larger system.
  •  
  • Small or midsize law firm. These are practices with multiple lawyers, and most likely have an on-staff or outsourced accountant. Legal billing software will be of crucial importance for that accountant (or to the individual attorneys if there is no bookkeeper), and trust accounting software should be considered a vital component of that software suite.
  •  
  • Large law firm. These are firms with many partners and associates, and a full accounting team. They will require a robust software system that includes billing, case management and legal document management. Trust accounting software, as one component of that system, will be extremely important, to make sure that the multiple trust accounts of various attorneys in the firm are maintained ethically, legally and accurately.

Benefits and Potential Issues of Trust Accounting Software

A trust accounting software system allows for easier, more automated management of attorneys' trust accounts. Though just a small part of running a law practice, trust accounts are nevertheless extremely important, and need to be properly handled. Trust accounting software can make this easier. Some benefits of using this software include:

Ethical and legal compliance. Trust accounting software can help you make sure you follow all the rules of ethics and law surrounding trust accounts in your state. This will increase your accountability to your clients, to yourself and to the state bar.

Separation of accounts. Software will let you keep track of multiple accounts so you don't run the risk of accidentally commingling client funds with your own accounts.

Increase client/audit readiness. If your client asks for reports about their account, or if you should be audited, trust accounting software ensures that you have proper, thorough records of all transactions, including deposits, payments, interest etc.

Trust accounting in CosmoLex

 

An example of CosmoLex trust accounting preventing an error

However, an overreliance on software is always a danger. In the case of the legal profession, making a mistake with your software will not save you from potential ethics violations or legal repercussions. Be sure you aren't just blindly following the software, and that you are well-informed about local and federal regulations regarding legal trust accounting. The software will aid you in managing those trusts, but it does not replace your own required due diligence.

Market Trends to Understand

Here are some market trends you should consider as you select a product:

Cloud-Based Software. Cloud-based systems are increasingly popular. They require less hardware than on-premises software as well as less IT knowledge, have lower upfront costs, and are more quickly implemented, making them a good choice for smaller firms/businesses, in particular.

Mobile functionality. As with most software at the moment, trust accounting systems are beginning to add mobile functionality, allowing you to access your software from a phone or tablet. This is particularly beneficial to solo firms where you can't be constantly bound to the office.

 

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