2017

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Trust Account Management in Clio

Clio makes it easy to manage all funds held in trust on behalf of your clients.

Most jurisdictions require that law firms address three primary requirements when managing client funds (be sure to check with your local authority for rules that apply to your law firm):

  • Account identification. Law firms must deposit funds into an account specifically labeled as a trust account.
  • Segregation of accounts. Law firms must keep client funds separate from a lawyer’s own funds.
  • Accounting records. Law firms must create and maintain appropriate records of funds belonging to their clients.

Here, we'll look at how Clio helps you meet all of these requirements with its trust accounting features and workflows. Not a Clio user? Read more about trust accounting with Clio.

Summary Links

Bank Accounts in Clio
Microledgers
Reporting
Viewing Trust information on an Invoice
Transfer
Three-Way Account Reconciliation

Bank Accounts in Clio

You will need at least two accounts created in Clio - one for Trust and another for Operating.

The Trust account is where you are going to deposit a client's funds from within a Matter's "Transactions" subtab.

The Operating account is a record of your revenue earned, and is where money is transferred to when paying an invoice from your Trust account.

More information on bank accounts in Clio can be found HERE.

A new Transaction, or Debit, can be added in your Trust account by clicking Add on the right hand side. From here you can specify which Client and Matter the Trust deposit pertains to.

Ensure that any deposits made within the Trust account are directly linked with a Matter or Contact. Without connecting these funds to a Contact or Matter, they are unassigned and will not Report properly. You can also make deposits into Trust from the Contact or Matter Transactions tab as outlined below.

Microledgers

The "Transactions" subtabs within both a Matter and a Contact card will give you a microledger of the transactions in and out of a given account for that Matter or Contact.

These microledgers are where you are going to be doing the bulk of the recording of incoming Client Trust funds and viewing the line items to ensure the funds are accurate. 

Information on how to enter Client funds into Trust from within a Matter can be found HERE

Reporting

One of the biggest concerns with working with funds in Trust is the ability to report accurately on them.

The Trust Ledger report is going to give you a full listing and audit of all of the funds in and out of the Trust account for a given Contact in Clio, across all of their Matters. 

If you find you need to view that information in a spreadsheet program, it is easy to generate the report as a .csv which can be opened and manipulated in Microsoft Excel or another spreadsheet application. 

Viewing Trust information on an Invoice

Additionally, as an attorney you are often required to notify the client of their funds in Trust, and it is easy to display this information on invoices in Clio using our Bill Themes feature. 

It's easy to design a bill theme that shows both transactions in and out of Trust for the Client along with the remaining balance. 

To add this information to your bill theme, please follow these steps:

  1. Navigate to Settings > Billing > Bill Themes
  2. Select the bill theme you would like to modify
  3. In the first box, select "Statement of Account"
  4. In the second box, select "Client Account"
  5. Choose either "Account Details" or "Account Summary" in the third box
  6. Review the highlighted grey area in the sample preview to determine if that is the view you'd like
  7. Additionally, in the third box you can select "Detail of Accounts" and determine if you would like to include the Trust account in balance calculations

You can find additional information on how to modify your bill themes HERE.

Transfer

If the deposited Trust Funds require a transfer between accounts, from the Transactions tab within the Contact or Matter, click "Transfer funds" on the right hand side. In the "Transfer funds" window, add the information for your transfer.

Here you can specify the Source account where the funds are coming from, the Destination account where the funds are moving to, the amount that should be moved, and any other pertinent details. Once finished, click Record Transfer.

Three-Way Account Reconciliation

A three-way reconciliation is a routine procedure that ensures your trust account ledgers align with your individual client ledgers, and that both of these records match your actual bank account register. This type of reconciliation is unique to law firms, and many accountants won’t be familiar with the process.

As part of your duty to keep accounting records for funds held in trust, you must reconcile your trust bank account regularly. Some states require that lawyers conduct a three-way reconciliation on a regular basis, and this fiduciary responsibility ultimately resides with you.

With Clio, performing a three-way reconciliation of your trust account ledgers can be done in two easy steps.

Step 1: Reconcile trust accounts and individual client ledgers. Trust account ledgers in Clio are linked directly to individual client ledgers, which helps ensure that all transactions are aligned between both records. Clio’s reporting features make it easy to generate statements for simpler three-way reconciliation:

  • Clio’s Trust Listing Report shows client- and matter-level trust account totals.
  • Clio’s Trust Ledger Report shows account balances for all separate and pooled trust accounts.

Step 2: Reconcile your bank account. Once you have summaries of your trust accounts and individual client ledgers, you can reconcile these amounts to your actual bank accounts by comparing them to your bank statements or the information you keep in your accounting software (such as Xero or QuickBooks Online).

Not a Clio user? Read more about trust accounting with Clio.