Managing Trust Accounts (IOLTA)
Track each client's trust balance and use trust funds to pay invoices
Applies to: LawBillity
When a client pays a retainer into your trust account, LawBillity tracks that money separately for each client: deposits in, withdrawals to pay invoices, and the balance left. You get the records you need for bar audits.
Setting Up Your Trust Account
- Go to Settings > Trust Accounts.
- Enter your firm's trust bank account details: bank name, account number, and routing number.
- Turn on trust account tracking.
- Click Save.
Day to Day
- Deposits: record a retainer or other deposit into a client's trust account, with the date, amount, source, and description.
- Paying an invoice from trust: when you finalize an invoice, you can take the amount from the client's trust balance. See Finalizing and Sending an Invoice.
- Balances: each client's balance updates on its own as deposits and withdrawals are recorded.
- Reconciling: compare the balances with your bank statement regularly. Most jurisdictions require it monthly.
Trust Reports
Run the Trust Accounts report from Home > Reports to see transactions, current balances, and reconciliation status for all clients. Keep it for bar audits and your own compliance reviews. See How to Run a Report.
Important: Trust accounting rules vary by jurisdiction. LawBillity gives you the tracking, but check your bar association's rules for what your state requires. Mixing client trust funds with operating funds is a serious ethical violation, and keeping them separate is what these tools are for.
Common Problems
- You can’t apply trust funds to an invoice. Check that the client's trust balance covers the amount and that the deposit was recorded first.
- The balance doesn’t match the bank. Look for a deposit or withdrawal that wasn't recorded, then reconcile again.
- Clients pay you online. LawPay is built for law firms and trust account rules. See Setting Up Online Payments (Stripe, LawPay, CPACharge).