Client Trust Funds & Three-Way Reconciliation Report - CARET Legal

As an attorney, there are no shortage of minefields that can land you in hot water.   While many of the dangers that lurk can be subjective or unavoidable, failing an audit of client trust funds is one that consistently strikes fear into one’s heart.  Yet, keeping your trust funds in good order need not be a challenge if you employ the right process and software.

How a Three-Way Reconciliation Works

One of the most effective ways of ensuring that your trust accounting is in order is through a three-way reconciliation report which ensures that the following values match, typically as of the date of each bank statement:

1. Bank Balance – This is the balance that shows on your bank statement.
2. Book Balance – This is the value you keep in your register.  While technically this can be on paper, for most attorneys, this is performed by their legal trust accounting software
3. Sum of Matter Balances – This is the sum of all the matter ledger balances.

In CARET Legal, for each trust account, you can generate a 3-way Reconciliation Report as of any date and have them saved for your records.  If the 3 balances match, the report will show an underline under each of the 3 balances.  If there is no match, you can review your transactions for that period to make sure there are no missing or incorrect transactions.