Legal Trust Accounting

Trust accounting is a form of law firm accounting that manages client funds held in trust accounts. In the legal industry, trust accounting is governed by specific compliance rules that attorneys must abide by. For example, client funds in trust accounts cannot commingle with money held in the law firm’s general accounts. Additionally, any fees for storing trust account funds, like credit card processing fees, must be charged to the law firm, not the client funds.

Finally, law firms of all sizes are required to provide detailed records of trust accounts, including bank reconciliations.

Because the rules governing client funds and trust accounts are specific and complex, many legal professionals find it easier to use trust accounting software to help law firms ethically manage these complex accounts.

However, generic small business accounting software, like QuickBooks Online, isn’t equipped to manage these accounts while ensuring compliance with legal standards. As such, the use of these products can actually create more work for attorneys and other legal professionals, since complex workarounds must be used to manage legal trust accounts.

Legal practice management software solutions that include trust accounting software allow law firms to handle firm financials and legal trust accounts with ease. CosmoLex’s legal trust accounting software was designed for trust accounts, with built-in features that ensure compliance with complex legal standards. Because CosmoLex’s legal accounting software integrates with its other functions, like practice management and billing, CosmoLex streamlines financial processes for firms, meeting law firms’ accounting needs while reducing syncing errors between programs or time spent performing duplicate data entry.

Trust accounting is a form of law firm accounting that manages client funds held in trust accounts. In the legal industry, trust accounting is governed by specific compliance rules that attorneys must abide by. For example, client funds in trust accounts cannot commingle with money held in the firm’s general accounts. Additionally, any fees for storing trust account funds, like credit card processing fees, must be applied to the firm’s funds, not the client’s.

Finally, law firms of all sizes are required to provide detailed records of trust accounts, including bank reconciliations.

Because the rules governing client funds and trust accounts are specific and complex, many legal professionals find it easier to use accounting software to help law firms ethically manage these complex accounts.

However, generic small business accounting software, like QuickBooks Online, isn’t equipped to manage these accounts while ensuring compliance with legal standards. As such, the use of these products can create more work for attorneys and other legal professionals since complex workarounds must be used to manage legal trust accounts.

Legal practice management software solutions that include trust accounting software allow law firms to handle firm financials and legal trust accounts with ease. CosmoLex’s legal trust accounting software was designed for trust accounts, with built-in features that ensure compliance with complex legal standards. Because CosmoLex’s legal trust accounting software integrates with its other functions, like practice management and billing, CosmoLex can streamline financial processes for law firms, meeting their trust accounting needs while reducing syncing errors between programs or time spent performing duplicate data entry.

CosmoLex’s trust accounting software for law firms is packed with all the features legal teams need to manage complex transactions for trust accounts. And the best part is these trust bookkeeping tools work automatically in the background while users work on other tasks with the legal billing software.

To start with, CosmoLex has built-in protection tools for trust accounting, like a stoppage on ledger overdrafts and fund commingling. With this tool, trust accounting software finds errors and reports them faster. In fact, law firms can easily perform effortless trust reconciliations with our audit-ready tools that ease mandatory trust accounting requirements. Running bank reconciliations, including three-way reconciliations, can be done in just a few clicks, and financial data reports can be archived for security purposes.

Finally, CosmoLex automatically provides thorough, complete trust financial reports, including trust account balance reports, trust ledger activity summary reports, and trust ledger transaction reports. Having these reports on hand ensures attorneys are always prepared in case of an audit.

CosmoLex is the best trust accounting software for a reason—we take the guesswork out of navigating these complex accounts and enable legal professionals to feel confident in handling trust financial data. 

We get it, sometimes you want to try before you commit to a new legal practice management software, especially when your firm’s legal compliance with trust accounts is on the line. That is why we offer a free 10-day trial of CosmoLex for interested law firms (with no credit card required) and schedule free demos for interested customers. The free trial offers all the same functionality as a paid subscription, so legal firms can get a real taste of all the tools CosmoLex uses to maximize profitability and boost productivity before they select to move forward.

We want to ensure your legal practice is satisfied with our suite of comprehensive cloud-based software services, which is why we also offer a money-back guarantee if subscriptions are canceled within 90 days of purchase. With all-inclusive pricing and no long-term contracts, CosmoLex is the safe legal practice productivity solution you have been looking for. To see how your firm can use our legal trust accounting software to streamline financial processes, fill out the interest form on our website and get started using CosmoLex today.

At CosmoLex, we put great value on data security with all our cloud-based software, which is why we abide by high security standards that are independently reviewed by outside cybersecurity auditors. We store all data in North America; depending on the location of your firm, your data may be held in a data center in either the U.S. or Canada.

In addition to keeping all data stored close to home, we use other cybersecurity best practices, like requiring two-factor authentication on all accounts. We store all data in an encrypted state, so confidential information can never be accessed, even in the case of a breach. Additionally, all data in our trust accounting software is encrypted by military-grade 256-bit SSL encryption, and all data on our servers is backed up every few hours, so data is protected even in the case of a power outage or other natural disaster.

To demonstrate our high security standards, we recently completed the SOC 2 Type 1 security attestation. To achieve this certification, we submit a formal audit by a cybersecurity investigator.

CosmoLex helps firms stay in compliance with several standards set forth in the legal industry. For example, our trust accounting software maintains incredibly strong security standards, ensuring client documentation is always safe and secure. Because lawyers have an ethical duty to ensure client confidentiality, CosmoLex helps small and mid-sized law firms stay in compliance by encrypting information and securely housing documents and data for trust accounts.

One major concern for many law firms accepting online payments is staying in compliance with the rules surrounding trust and IOLTA accounts. These rules dictate that client funds cannot be commingled with general funds in operating accounts, that credit card processing fees from online payments cannot be taken from client accounts, and that comprehensive three-way reconciliations be performed daily for trust accounts.

CosmoLex has specific safeguards in place to prevent breaches in legal compliance when working with trust accounts and complex transactions. For example, CosmoLex’s credit card processor, CosmoLexPay, automatically pulls fees from a designated legal account instead of from the client account. This feature saves you time and money.

As the best trust accounting software, CosmoLex also helps law firms remain in compliance by providing marketing automation tools, time tracking and document organization, and more, ensuring all attorneys provide ethical, prompt representation to every client.

CosmoLex’s highest priority is making the life of legal professionals more efficient, cost-effective, and compliant, which is why we have top-notch security features that keep confidential client information safe. We know attorneys are ethically bound to use secure software tools that ensure client confidentiality, which is why we take our commitment to cybersecurity practices so seriously.

To start, all data managed by CosmoLex’s legal practice management system, including case research, client demographic information, and messages sent on our secure client portal, are encrypted when entered into our system. We even store critical documents in an encrypted state, so no unauthorized viewers can ever obtain confidential information.

We use bank-grade 256-bit SSL encryption standards to protect all data. We require two-factor authentication to be used by each CosmoLex user, to prevent unauthorized accounting system access. Finally, on each account, security permissions can be customized, so only the appropriate law firm employees can access the necessary information.

CosmoLex has received cybersecurity certification with our SOC 2 Type 1 attestation, which requires an independent audit of our security practices by a cybersecurity professional. This was a voluntary certification we pursued to further our cybersecurity practices and continue to serve our clients to the best of our ability.

We also passed a threat assessment analysis test which was performed by leading cybersecurity expert Phalanx Secure Solutions, Inc.

When you purchase a CosmoLex subscription, you access our free, in-house support. We’re available every step of the way to help law firms make the most of our supportive features. When many firms first partner with CosmoLex, they’re transitioning over from a different legal practice management software solution. We help firms safely and securely migrate their existing data with a turn-key service, when requested, to ensure all data is transferred to CosmoLex successfully and without data loss. 

  Once law firms start using our system, our in-house support team is always available to provide training or onboarding or simply answer specific questions about our products and services. Whether your firm needs help understanding how to create invoices from time entries, set up custom workflows to enhance your project management, use our legal customer relationship management tools to convert more leads to clients, or generate actionable reports from your law firm’s accounting software, our team members are ready and available to assist you. 

CosmoLex is designed for attorneys and law firms, but its use has major benefits for clients, too. When you use this legal proactive productivity solution to manage your business accounts, you improve the customer experience from your first touchpoint to your last. CosmoLex’s automation and client management tools help firms streamline client intake, making the process fast and seamless with features like secure document sharing and eSignature.

During representation, clients access a secure client portal where they can message their attorney, send and view important documents, and access their billing reports. CosmoLex use also enables clients with the option to pay invoices via credit card or online, improving law firm accessibility and boosting client convenience.

Small and mid-sized law firms especially love the fact that they can create professional-looking invoices and email them to clients with a click, which helps clients get their bills paid by their due date. The legal accounting software can even send automatic late payment reminders to past-due clients to help clients stay on track with payments throughout their matter. Each of these features frees up time for your firm and legal teams in ways that another accounting system like QuickBooks can’t.