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Trust Accounting (IOLTA)

Manage client trust funds with a validated ledger. Record transactions, maintain per-client balances, and reconcile against your bank statement.

Trust Accounting Overview

B.Legal's trust accounting module maintains a per-client ledger within your trust account, enforces separation of client funds, prevents overdrafts on a per-matter basis, and writes every transaction to an append-only audit log.

Trust ledger entries are immutable once saved. Entries are not edited or deleted -- corrections are made by recording an offsetting entry. This keeps the history complete and trustworthy.

Important

Trust accounting records are subject to state bar oversight. B.Legal is a tool to assist you in maintaining compliant records, but the responsibility for proper trust accounting rests with the attorney. Consult your jurisdiction's rules for specific requirements.

Recording Deposits

What it does

A trust deposit records funds received into your IOLTA account on behalf of a client. Common deposits include retainer payments, settlement funds, and court-ordered payments. Each deposit is linked to a specific client and matter, increasing that matter's trust balance.

How to use it

  1. Open the Trust section. Click "Trust" in the sidebar. The trust ledger shows all transactions sorted by date.
  2. Create a new deposit. Click the + button and select "Deposit."
  3. Select the client and matter. Choose the client whose funds you are depositing and the specific matter the deposit relates to.
  4. Enter the amount. Type the deposit amount in dollars and cents. B.Legal uses exact, cents-safe math -- no rounding.
  5. Add the details. Enter a check number if the deposit came by check, and a description of the deposit (e.g., "Initial retainer per engagement letter dated 3/15/2026").
  6. Save. Click "Record Deposit." The deposit is immediately reflected in the matter's trust balance, and the entry is immutable once saved.

Tips

  • If you enter a deposit for the wrong client or amount, do not try to edit it. Record an offsetting withdrawal with a description explaining the correction, then record the correct deposit.
  • Recording check numbers makes bank statement matching much easier at reconciliation time.

Recording Withdrawals

What it does

A trust withdrawal records funds disbursed from the IOLTA account. Common withdrawals include earned-fee payments to the firm, disbursements to clients, payments to third parties (experts, court reporters, filing fees), and refunds. Each withdrawal reduces the specific matter's trust balance and is validated against that balance before it can be saved.

How to use it

  1. Open the Trust section. Click "Trust" in the sidebar.
  2. Create a new withdrawal. Click the + button and select "Withdrawal."
  3. Select the client and matter. Choose the client and matter from which funds are being withdrawn.
  4. Enter the amount. B.Legal checks the matter's current balance and will not allow a withdrawal that exceeds it (see Overdraft Protection below).
  5. Add payee and description. Record who the funds went to, the check number if applicable, and the purpose (e.g., "Payment of Invoice #1042 for legal services rendered" or "Expert witness fee - Dr. Smith, deposition 3/20/2026").
  6. Save. Click "Record Withdrawal." The matter's trust balance decreases immediately.

Tips

  • When a withdrawal pays one of your invoices, also record a payment on that invoice with the "trust" payment method, so the billing records and the trust ledger tell the same story.
  • For multi-payee disbursements (e.g., settlement distributions), create a separate withdrawal for each payee. This keeps the ledger clear and each disbursement independently auditable.

Per-Client Balances

What it does

B.Legal maintains a running balance for each client and matter within your trust account. The total of all client balances should equal the bank balance of the trust account at all times. This per-client ledger is the foundation of IOLTA compliance and is the first thing a state bar auditor will review.

How to use it

  1. View balances. The Trust section shows balances per client and per matter, computed from the ledger itself.
  2. View transaction history. Drill into a client or matter to see its deposits and withdrawals.
  3. Export the ledger. Export the full trust transaction history to JSON, CSV, or PDF from the data export tools -- for backup, migration, or review.

Tips

  • Compare the ledger total to your bank statement balance every month using the Reconciliation tab (see below).
  • Trust balances are also visible from the matter's overview for quick reference.

Audit Trail

What it does

Every trust transaction recorded in the native app is automatically written to an append-only audit log in the cloud -- who created the transaction, what it was, and when. Combined with the no-edit, no-delete ledger design, this gives you a durable record of every movement of client funds.

How it works

  1. Logging is automatic. There is nothing to configure or remember -- every trust write produces an audit record.
  2. Entries are append-only. Audit records are written once and never modified.
  3. Corrections leave a trail. Because corrections are offsetting ledger entries rather than edits, the audit log and the ledger always agree about what happened.

Tips

  • Conflict checks and reconciliation runs are recorded too, so your compliance-relevant actions accumulate evidence as you work.
  • For a portable copy of your trust records, use the JSON/CSV/PDF export at any time.

Overdraft Protection

What it does

Overdraft protection prevents withdrawals that would take a matter's trust balance below zero. This is a hard constraint enforced in the single validated write path -- it is not a warning you can click through. Overdraft prevention is a critical IOLTA discipline that protects against misappropriation of one client's funds to cover another's.

How it works

  1. Automatic balance check. When you create a withdrawal, B.Legal compares the withdrawal amount to the matter's current trust balance. If the withdrawal would exceed the balance, the save is rejected with an error explaining the shortfall.
  2. No override. Overdraft protection cannot be disabled or bypassed. If you need to disburse more than the matter's balance, deposit additional funds first.

Tips

  • If you are paying an invoice from trust and the balance is insufficient, you can record a partial payment for the available balance and bill the remainder as accounts receivable.

Three-Way Reconciliation

What it does

Three-way reconciliation is the gold standard for trust account compliance. It verifies that three figures agree: (1) the bank statement balance, (2) your book balance (the trust ledger total), and (3) the sum of all individual matter ledger balances. B.Legal runs the comparison and itemizes any discrepancies.

How to use it

  1. Open the Reconciliation tab. In the Trust section, switch to "Reconciliation."
  2. Enter the statement details. Enter the statement date and the ending bank balance from your bank statement.
  3. Review the three-way comparison. B.Legal compares:
    • Bank balance: The figure you entered from the statement.
    • Book balance: The B.Legal trust ledger total.
    • Client ledger total: The sum of all per-matter balances.
  4. Review discrepancies. If the three figures do not match, B.Legal shows an itemized discrepancy list. Common causes include outstanding checks, unrecorded bank fees, interest earned, and data entry errors. Investigate and correct with offsetting entries as needed.
  5. Save and export. Each reconciliation run is saved with the statement date, balances, discrepancy count, and who ran it. Export the report for your records.

Tips

  • Reconcile monthly, on the same day each month, immediately after receiving your bank statement. Consistency is key for state bar compliance.
  • Bank fees should be covered by a small balance of firm funds maintained in the trust account where your jurisdiction permits it -- never by client funds.
  • Interest earned on IOLTA accounts is typically remitted to the state bar foundation. Record it as a separate line item.
  • Past reconciliation records are retained, so you can show a consistent monthly reconciliation history.

Need help with trust accounting setup?

Our team can help you set up your trust ledger and walk you through your first three-way reconciliation.

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