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COSMOLEX PRODUCT SPOTLIGHT

Legal Trust Accounting Basics: Stay Compliant with Confidence

By CosmoLex

Legal trust accounting mistakes can lead to serious consequences for your law firm. With built-in accounting, CosmoLex provides the tools necessary to remain in compliance.

legal trust accounting

Trust accounts are among the most complex aspects of running a law firm — and they can be especially intimidating for small firms because there are fewer people to bear the fiduciary responsibility.  

To add to the stress, compliance mistakes with trust or IOLTA accounts can lead to serious consequences, ranging from fines to disbarment.

Law Firms Using Cosmolex Software Don’t Worry About Audits

With built-in legal accounting, CosmoLex has been providing industry-leading trust accounting tools for close to 15 years, one reason why it is the preferred practice management solution for the Canadian Bar Association.

The key factor for CosmoLex’s success in trust accounting is providing the tools necessary to remain in compliance that don’t require cumbersome workarounds when using QuickBooks or other non-legal accounting packages.

There are three main reasons every small law firm should be using CosmoLex’s trust accounting.

1. Reduce Compliance Risk

General accounting software doesn’t have built-in safeguards to prevent trust accounting mistakes. Unless you use these tools with extreme care, you could accidentally overdraft a client’s trust funds or commingle accounts. These mistakes can cost you your practice, reputation, and hard-earned income.

CosmoLex has built-in compliance features designed to give you peace of mind when managing client funds. The software can quickly run through ledgers and transactions to identify any errors and alert the user so that they can be addressed accordingly.

2. Minimize Administrative Tasks

When you maintain trust accounts, you have a long list of administrative tasks you must complete just to manage your clients’ different trust accounts. From printing disbursement checks to tracking third-party lien claims, there’s no shortage of steps involved in properly managing those funds.

With the right software, you can automate many of these tasks and reduce your non-billable hours.

CosmoLex has tools to help with:

  • Managing individual client ledgers without mistakes
  • Processing individual or bulk invoice payments from trust funds
  • Transferring earned funds from trusts to firm accounts
  • Importing electronic bank statements
  • Generating comprehensive trust reports

For small firms with limited resources, reducing the administrative workload for trust accounting can make a huge difference in how the firm operates.

3. Streamline Trust Accounting Processes

Three-way reconciliations are one of the most important parts of maintaining a trust account. However, the process of carrying out the reconciliation can be incredibly time-consuming. 

For example, a firm must manually compare its trust account bank statement to its internal books and client ledger balances — and this step must be repeated for every trust account maintained by the firm, so it can take several hours to complete. Not to mention, it opens your firm up to human error. 

CosmoLex’s trust accounting tools allow you to automatically run three-way reconciliations that are fast and error-proof. Best of all, it can also archive all the reports to protect your firm against future audits.

Start Your Free Cosmolex Trial Today

CosmoLex offers a free trial with personalized, hands-on training where our experts show you how to set up your trust accounting for unparalleled success. CosmoLex also provides best-in-class migration services from your old accounting tools. Start your trial now.

SPONSORED CONTENT. Our product spotlight content is provided by Attorney at Work sponsors and advertisers. This does not constitute a product endorsement by Attorney at Work. See Terms and Conditions for more information. 

Categories: Accounting Software, Legal Software, Legal Technology, Product Spotlight
Originally published January 26, 2024
Last updated January 27, 2024
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CosmoLex is a comprehensive software for practice management, accounting, billing, document management, and more for lawyers. An end-to-end application to help you work faster, increase efficiency and accuracy, and ensure you stay compliant. Try for free at www.cosmolex.com.

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