Accounting for Attorneys

When a client hands you a retainer check, they’re not just funding future legal services.

They’re placing trust in you.

And that trust isn’t symbolic - it’s financial, ethical, and regulatory.

For attorneys, a properly managed trust account is not just a bookkeeping requirement. It is the bedrock of your professional reputation, your license, and your firm’s long-term stability.

Let’s break down why trust accounting matters, and why having the right financial support behind you is critical.

What Is a Lawyer Trust Account, Really?

When a client hires your firm and provides funds upfront for anticipated legal services, those funds cannot go into your operating account.

They must be deposited into a separate, designated trust account, commonly called:

• IOLTA

• IOLA

• IOTA

• Attorney Trust Account

These are not standard checking or savings accounts. They are special-purpose bank accounts governed by state bar rules and strict regulatory oversight.

You cannot simpl...

Running a law firm demands sharp thinking, long hours, and constant decision-making. You’re juggling client work, court deadlines, intake, staffing, and strategy. But somewhere behind the scenes, usually after hours, there’s the part no one went to law school for:

Your firm’s financial system.

Whether you’re managing it yourself or depending on a bookkeeper who “mostly gets it right,” the truth is simple:

Your numbers should give you clarity, control, and confidence… not confusion or stress.

At The Proper Trust, we work exclusively with attorneys, so we see the same pattern again and again: brilliant legal minds trying to grow their firms without a financial foundation designed for the way law truly works.

If you’re wondering whether it’s time to bring in a legal accountant, here are the key signs—and how the right financial partner can transform your practice.

1. Trust Accounting Shouldn’t Feel Risky

Trust/IOLTA is the backbone of legal compliance, but it’s also one of the easi...

When attorneys think about conflicts of interest, they usually picture ethics rules, client intake checks, and courtroom disclosures. But conflicts don’t live only in case strategy—they also live quietly in the financial systems that support a law firm.

That’s where legal accounting matters.

A legal accountant doesn’t just “do the books.” They operate inside a tightly defined ethical framework that protects your firm, your clients, and your license. And when those boundaries are misunderstood—or ignored—the consequences can be serious.

Let’s talk about what conflicts of interest look like in legal accounting, and why choosing the right accounting partner makes all the difference.

What Is a Conflict of Interest in Legal Accounting?

In the accounting world—especially when serving law firms—conflicts of interest arise when professional judgment could be compromised, intentionally or unintentionally.

Some common examples include:

• Self-review threats
  An accountant should never

  ...

Hiring an accounting team isn’t just about clean books. In a law firm, it’s about ethical guardrails, trust accounting compliance, and the kind of internal controls that keep your practice steady, even when things get busy, staff changes happen, or the year-end pressure hits.

Because here’s the truth attorneys already know (even if we don’t always say it out loud): in legal accounting, “small” issues have a way of turning into big ones. And when they do, the consequences don’t land on your bookkeeper’s desk.

They land on your license.

So what does ethical legal accounting actually look like in real life? And what should you expect from an accounting team that understands the legal industry?

Let’s unpack the most common ethical pressure points we see, and the systems that prevent them.

1) Ethical Legal Accounting Starts With Oversight, Not Hope

Many accounting problems don’t come from bad intentions. They come from something far more ordinary:

• A rushed approval

• A missing

  ...

If you’ve ever looked at your firm’s financials and wondered, “Is this money actually ours to spend?”—you’re not alone.

Retainers are one of the most misunderstood (and most risky) areas of law firm finances. While they may seem straightforward on the surface, how retainers are handled can directly impact compliance, cash flow, and even your ability to return client funds when required.

Understanding the difference between trust retainers and operating (accounts receivable) retainers is essential—not just for your bookkeeper, but for you as a firm owner.

Why Retainers Matter More Than You Think

At year-end (or during a cleanup), retainers tend to reveal the cracks in a firm’s financial systems. Money that looks fine month-to-month can suddenly raise questions like:

• Who does this money belong to?

• Has it actually been earned?

• Could we refund it today if we had to?

• Why doesn’t this balance match what’s in the bank?

These aren’t academic questions. They affe...