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What's most important for the Law Societies, is having a unique ledger for each trust client. From LeanLaw's interpretation, your accountant correctly setup QBO to structurally compliant with our understanding of the Law Societies guidance. The challenge is that Clio keeps it's ledger information in it's own application, only sending a single line item to the trust liability ledger. This inherently will create the need to use JE to move items from the top level to a specific client ledger. LeanLaw automates this process, and will sync with the client subledgers. We want to be cautious in directing journal entries as that isn't a known, and acceptable pathway for a LeanLaw client, or an an law firm managing their trust independent of a financial managing tool such as LeanLaw. We're not trying to dodge the question, we just don't want to represent what we don't know. Our advice is to either disconnect the trust activity from Clio and managing independently, reconciling at the end of the month, or seek guidance from the Law Society.

@@LeanLaw I appreciate your quick and honest response. I'm going to reach out to the Law Society to confirm my process.

@lorgayle1, please let us know your findings.

Hey Anthony, my name is Jonathon Fishman, and I am one of the founders and serve as the CEO of LeanLaw. I appreciate your comment and would welcome your thoughts on your topic. Your opinion means a ton to me, and I want to share with my team where you think we need to be cautious and what you see as the main appeal of LeanLaw. Thanks so much for your input.

Thank you.

They cannot be in separate QBO files. Doesn't work that way.

Thank you, Lynda!

Hello David, our research with both the ABA and the State Bar associations aren't in alignment with your comments. When law firms receive retainers, they must be deposited into the trust bank account as to not co-mingle with operating funds. Only when the services are earned, and ideally an invoice is presented, would you then pay the invoice and move the funds into the operating account. There are some States where you can treat retainers as earned income, but it isn't the norm, both in bar association guidance or law firm practice.

Much appreciated!

The check is just a placeholder. It's best to articulate whatever instrument you received the money. If it was LawPay, then, yes, LawPay is what you should identify.

Hello there. This isn't the best medium to answer your questions as they are complex. LeanLaw can help facilitate all of the work associated with a settlement. LeanLaw will allow for the receipt of the initial settlement payment, ensuring the correct accounting is set up in QBO. Handle the firm's reimbursements for expenses and legal fees, the payment of any liens, and finally, the disbursement of the client funds. Here's a link that explains this in greater detail. support.leanlaw.co/en/articles/1311765-how-to-bill-for-contingent-fee-matters We hope this helps.

Thanks so much!

Glad it was helpful! Most of our client's are law firms but we do have a slew of non legal professional service organizations and property management entities.

Hello Richard, you may be confusing LeanLaw features that facilitate the trust transactions within QuickBooks Online. There are aspects of this video that show how to handle these trust activities using LeanLaw in tandem with QuickBooks Online. Let us know if you have additional questions. Thanks for your feedback.

Hello Richard, this isn't the right medium to answer this specific question. Feel free to use our chat tool from our Website (www.leanlaw.co) and our team can better answer your questions.

Hello Shelly, sorry for the late reply. First, you should always check with the State's bar association for their specific guidance. We at LeanLaw follow the ABA and a few of the state opinions. We have clients do it both ways. Some bring over every ledger item for the specific trust account. While this is arduous, it does keep all of the transactional information in one cohesive ledger. A second tactic is to establish the trust ledger with an opening balance. Within that opening balance, you can add a export from the previous method of tracking. Thus, you have the historical transactions available as needed. This tends to be more efficient.

Hello Tonu, we don't have any information as to best practices in QuickBooks Desktop as we don't support that product. LeanLaw only integrates and works with QuickBooks online. With that said, the accounting principals should apply. Thanks for watching!

Thanks Carolyn, feel free to provide us feedback or topics you would like to see discussed.

You can make a specific sub-ledger for fees and interest as the interest is simple money in/money out. The same happens for the bank fees as it's the law firm's responsibility to cover those fees. I will state that you should always check with the State's Bar association to ensure you are following the specific procedure. The Bar Association will always be helpful in ensuring you have the right information to adhere to the State's rules.

Hi Justin, I just saw this video - I'm a freelance bookkeeper for law firms and I use LeanLaw. I just looked into this and I think the issue may be with the 1099 setup. When you go to "Prepare 1099s" on QBO (you can look at this now, even though you're not ready to do 1099s), try this: Go to "expenses", then click "Prepare 1099s" at the upper right, then "continue your 1099s". Once there, you want to hit the "Back" button until you get to step 2, "Accounts." For each appropriate box you need to use, click, and go to "multiple accounts." The liability account you set up should be on the list and you can click that, as well as others. If this doesn't make sense or doesn't work, please let me know.

@@susannatali I hoped that your solution would work, but it unfortunately does not. The issue is that the payment to the medical services providers cannot be marked as a "medical payment" as the category selected when making the payment from a trust sub-account. I have to select as the category of payment, the trust sub-account that the payment is being made out of - I can't do both. The solution to this seems to be having one giant trust account not marked for a particular client in quickbooks. Then I wouldn't need to select each client sub-account as the source of payment in the category selection, and could mark the category as medical payments. However, then I lose the ability in quickbooks to have a trust account funds register for each individual client. It would just be one very large register for all clients' pooled money, and then a memo description of what belonged to each client - which is less than ideal. The work around is maintaining a separate excel file, but then again I'm doing double work. Ideally, Quickbooks would just show in the 1099 filing prep, payments to all vendors marked as track for 1099, and allow me to either issue them a 1099 or not, while manually marking the box which should corresponds to the type of payment made.

How are you documenting receiving the money? A sales receipt will have a different result from an invoice and a customer payment. When a client pays, I create a bank deposit into my iolta bank account and assign the customer's name and liability subaccount and my transaction report balances properly.

if you set up Trust accounting with QBO AND LeanLaw, we could help you overcome this issue.

Thank you thank you! Did you know that LeanLaw Accounting Pros get a free seat on the software, Tier 2 support, and REFERRALS? Check us out: www.leanlaw.co/accounting-partners/

Thanks so much for such a great reply!

As we assessed alternative methods as to not leverage the chart of accounts, we always ended up circling back to our core beliefs as to how we architected the trust management as it relates to QBO. Here's how we approached understanding the problem: What if LeanLaw moved to a single liability ledger in QBO. We would have to store the ledgers in LeanLaw, thus breaking from our belief that QBO is the source of truth. Technically, it would be very difficult with the QBO API, to represent client/matter trust accounts in LeanLaw. Our clients need a simple ledger as to what they're holding on behalf of their clients. What does our client's current client's chart of accounts look like? What burden is the liability ledgers? When we looked at our client base and assess their chart of accounts, we found that many of the folks had a rather sloppy chart of accounts with many inactive items. Lot's of expenses. Thus, we felt that cleaning the chart might alleviate some of the burdens. What do the Bar Associations state relative to compliance? If you dig into the compliance rules, you will see specific mentions to the handling and reconciliation of the trust money. This would be VERY difficult if you were trying to manage this in QBO by simply tagging an entry to a client with a top level trust liability. Reports would be custom and very difficult for the lay user, and we would worry as to how the 3rd step of the 3-way trust reconciliation, making sure the money went into the right client/matter accounts, would be executed? If we don't have the money in and out in specific ledgers, how do you validate that you accounted for the money in an accurate way? Most folks would go back to Excel and not have the information in one place. Our decision to not change our approach is rooted in the importance of accuracy, data completeness, compliance. Yes, technically there are ways to achieve all of these without the use of trust ledgers, but for the majority of law firms not using our model would result in manual work with a high chance of inaccuracy. Their compliance and accountability to their client are worth the extra cost. Some lawyers won't get that, and focus on spending more money. We expect some churn in LeanLaw, but we would rather err on the side of compliance and be more expensive. Poor handling of trust money is far costlier than the upgraded QBO pricing. In the weeks to come, LeanLaw will be putting better tools in place to close trust matters and make inactive the liability accounts. We need to help there. We also expect to coach our users and accounting partners.