Mastering Compliance Standards:
CosmoLex as Your Essential Partner

Law firm compliance standards can feel like navigating a byzantine landscape, but they’re essential for protecting your firm’s reputation, financial well-being, and future, as well as the trust of your clients.  

When trust accounting is managed correctly, your firm can: 

• Avoid severe legal consequences, including fines, suspensions, and even disbarment, in the most serious cases of non-compliance 
• Minimize your liability by demonstrating that your firm made a concerted effort to maintain compliance, which can potentially grant you access to amnesty/reduced sanctions 
• Safeguard your firm’s reputation by demonstrating your commitment to meeting your fiduciary responsibility, which also means clients are more likely to trust you. 

With the help of CosmoLex, maintaining trust accounting compliance becomes second nature, requiring less work and creating less frustration than unwieldy manual systems or non-legal-specific software solutions. 

Overview of compliance standards for law firms 

What does it mean for a firm to maintain compliance with trust accounting standards? In order to be able to adhere to these standards consistently, it’s essential to understand what they actually entail.  

A law firm achieves accounting compliance when its financial transactions and reporting adhere to the accounting-related regulations established by bodies like the American Bar Association, the IRS, and other organizations. Although these rules vary by location, with state-specific regulations and local rules complicating compliance, there are some requirements that remain the same throughout the U.S.: 

• Funds held in trust for a client must not commingle with the firm’s funds 
• Firms must maintain detailed and accurate records of all trust transactions 
• Funds held in trust for a client may only be used for their legal matters 

Meeting these requirements using manual systems—or with general accounting software that isn’t designed for legal-specific accounting—can be an involved process. Moreover, it’s one where opportunities for costly missteps abound.  

Amidst this high-stakes landscape, CosmoLex offers a compliance-ready solution that takes the guesswork out of trust accounting requirements. 

Integrating CosmoLex’s compliance solutions for seamless adherence to rules and regulations 

As your firm assesses its compliance processes, CosmoLex is a reliable ally, with solutions tailored to help law firms meet even the most stringent compliance standards and regulatory requirements. Here’s how its built-in trust accounting tools can help: 

Automatic trust accounting functionalities 

Trust accounting can require a lot of minutiae. CosmoLex relieves that heavy lifting with extensive trust accounting features, including those that help with: 

• Managing individual client ledgers 
• Preventing common trust accounting mistakes (such as ledger overdrafts) 
• Making online payments using trust funds for both individual and bulk invoices 
• Automatic trust-to-general transfer 
• Printing disbursement checks  
• Tracking and disbursing third-party lien claims  
• Importing electronic bank statements and auto-reconcile books  
• Three-way reconciliation reporting in a single click 

Your firm will have more time and energy to focus on delivering the highest quality legal services to clients, while CosmoLex will complete these detailed tasks automatically and in the background. 

Expert training for trust accounting practices 

Successful trust accounting compliance begins with the right training practices, from your first orientation sessions for new employees to role-specific training sessions that ensure each employee understands the compliance procedures required for their position.  

CosmoLex ensures its users have access to all the information they need to ensure compliance by regularly offering a wide range of live, expert-led online classes, including lessons on getting started with CosmoLex, accounting workflow basics, and more. 

Granular access permission  

Every law firm should assign oversight of trust accounting compliance to the appropriate team members—those with a thorough knowledge of the requisite ethical standards, financial regulations, and other legal practice requirements to maintain compliance.  

CosmoLex makes it easy to set up granular access permissions so that only those in the appropriate job roles can access certain information.

How CosmoLex supports ongoing compliance 

Compliance isn’t a one-and-done task. It’s an ongoing endeavor. However, CosmoLex doesn’t just make it easy to achieve compliance; the software also helps law firms maintain compliance throughout the year:  

Comprehensive trust account reporting options 

Reports are central to trust accounting compliance, but you don’t want to have to jump through hoops to run them. CosmoLex offers a thorough and complete range of trust accounting reports at your fingertips, including: 

• Ledger balance 
• Ledger activity summary 
• Trust transactions 
• Client balance 
• Balance by matter name 
• Journal 
• Receipts journal 
• Disbursements journal 
• Transfer record 
• Three-way reconciliations 

Track specific KPIs to monitor your firm’s progress toward compliance goals 

Set specific and effective quarterly, annual, or other compliance goals with key performance indicators (KPIs) that help you track trends in your firm’s compliance and nip potential problems in the bud.  

For instance, if your goal is to resolve compliance problems more quickly on average, a useful KPI would be “mean time to issue resolution.” This is the average time it takes your law firm to address and resolve a compliance issue.  

Or, if you want your firm to spend less money on compliance issues, track “mean compliance expense per issue” to see if your firm is successful in reducing the average amount it spends on each compliance problem. 

CosmoLex makes it a breeze to access the data you care about. When you establish regular reporting on an ongoing basis, you can monitor your chosen KPIs and share them with stakeholders as needed. 

CosmoLex simplifies compliance (and more) 

As a comprehensive practice management solution designed to meet the complex needs of modern law firms, CosmoLex provides all the essential tools your firm needs to master not only trust accounting, but also: 

• Legal billing and payments 
• Electronic payment processing 
• Legal-specific business accounting 
• File sharing and eSignature 
• Client relationship management (CRM) 
• Websites 
• And more 

As an additional benefit, all of these functionalities are centralized in one intuitive, comprehensive software. This facilitates simpler and more streamlined workflows by saving you and your employees the time-wasting hassle of learning how to use—and then constantly jumping between—a variety of different programs. 

To begin using CosmoLex to meet your firm’s top compliance challenges, schedule a one-on-one demo of the software or start your ten-day free trial today.