One of the biggest headaches I encountered when I opened my own law firm was figuring out the reconciliation requirements by the Virginia State Bar. They are extremely important but there seems to be little helpful information out there on what is actually required.
Read your state bar rules. Read them again. And read them again. Handle the reconciliation rules like you would handle the law in any of the client's cases. Dissect them, pull them apart and break them down into subsections. If you don't understand any of those subsections, email a long-time practicing attorney and ask. Chances are, they'll be happy to explain it in simplified terms.
Once you understand what is required, do it and do it on time. In Virginia, we are required to do some reconciliations monthly and some reconciliations quarterly. The point of these reconciliations is to ensure that you trust account is in order, the funds are all accounted for and the proper disbursements have been made. This allows the attorney, in the case of a mistake, to catch it quickly and remedy that mistake. Personally, I prefer to do my monthly and quarterly reconciliations every month. It provides me with a more standard routine and is an even quicker check on my trust account than waiting every three months.
As with everything, schedule your reconciliations. On the 30th of each month, schedule a time, let's say from 4 - 5 p.m. to sit down and do your reconciliations. Putting it on your calendar will ensure that it does not fall through the cracks and will ensure you actually complete them within the required time frame.
Reconciliations are extremely important, especially for a solo practitioner who is handling a multitude of tasks at all time. Do not put your reconciliations off and if you are ever unsure, simply ask someone.
If you are a solo practitioner or thinking about "flying solo" and would like to talk about the process, please contact us at (804) 447-0146 or clbaudean@baudeanlaw.com.
I agree -- this is the MOST IMPORTANT PLACE to be anal. I use Quicken (tm) -- NOT Quickbooks (tm). Quickbooks (tm) is a simplified accounting program; Quicken (tm) is a simple cash management program. With a trust account you are managing cash flow only, not accruals, depreciation, debits and credits, etc. Each client is a 'liability' account (all the pre-programmed stuff is deleted); sub accounts and 'tags' are used as well to help separate out what I'm handling.
ReplyDeleteI go as far as to use it to handle estates and can prepare a court accounting in as little as 15 minutes if all data has been entered properly.