Accounting for law firms
and attorneys.

Three-way reconciliation compares your trust bank statement, your trust ledger, and the sum of individual client balances — all three must agree, every month. Connecticut, like every state, holds attorneys personally responsible for trust account integrity, and shortfalls are a bar-discipline matter even when accidental. Most trust violations are bookkeeping failures rather than dishonesty, which is exactly why the monthly discipline matters.

Only after fees are actually earned and properly billed, and only in the amount earned. Moving unearned funds — even briefly, even with intent to return them — is a violation. Retainers stay in trust until work is performed and invoiced against them. We track earned versus unearned balances by client so transfers are supported by documentation.

Through documented capital accounts, guaranteed payments, and a draw schedule that reflects your partnership agreement. Problems arise when draws exceed allocated income, when capital accounts are not maintained, or when the agreement says one thing and the books do another. Clean partner accounting also produces K-1s that arrive on time — something partners notice every April.

It depends on partner count, income level, and state professional-entity rules. An S-corporation election can reduce self-employment tax for owners once profit meaningfully exceeds reasonable compensation, but it complicates partner economics in multi-partner firms and limits flexibility in allocating income. We review structure against your actual partnership economics rather than applying a default.

With deliberate reserves and disciplined case-cost tracking. Contingency practices face long gaps between advanced costs and collection, and a single large settlement can distort a year. Advanced client costs should be tracked as receivables rather than expensed, and cash planning has to assume the settlement lands later than hoped. Firms that manage this well hold a reserve sized to their case pipeline, not to last year's revenue.

Yes. Allocating attorney time, staff cost, and overhead by practice area shows which parts of the firm generate real profit and which are carried. Firms are frequently surprised — a high-revenue practice area with heavy staffing can contribute less to the bottom line than a smaller, leaner one.

Most small and mid-size law firms use cash basis for tax purposes, which offers useful control over timing — accelerating expenses or deferring collections near year-end. Accrual gives a more accurate picture of firm performance for management purposes. Many firms benefit from cash-basis tax reporting alongside accrual-basis internal reporting.