Law firms don’t stall because of weak legal work—they stall on trust compliance, realization, and visibility. If reconciliations drag on, audits loom, and matter P&L is a mystery, it’s time to move beyond a lone bookkeeper to a legal-specialized outsourced accounting team.
TL;DR
- What it is: Legal-specific accounting delivered remotely by a specialist team (trust/IOLTA + operating + billing + reporting).
- Why it matters: Trust violations are a top discipline driver; most small firms lack proper systems.
- Core wins: Clean three-way reconciliation, audit-ready documentation, matter profitability, and higher realization.
- Typical cost: $2.5k–$15k+/mo depending on attorney count/complexity—predictable, scalable, no headcount.
The Scenario
Thomas’s 9-attorney PI firm outgrew its bookkeeper. Trust recs took three weeks; no proper three-way reconciliation; bar audit notice arrived. Building an internal team meant $150k+ plus management overhead. Outsourced, legal-grade accounting solved it—fast.
Reality: ABA data shows trust accounting violations are a leading cause of attorney discipline—yet 64% of solo/small firms report inadequate training/systems.
What “Outsourced Accounting for Law Firms” Includes
Unlike generic bookkeeping, legal-specialized providers deliver:
- Trust Accounting Management
IOLTA compliance, three-way reconciliation, client ledgers, bar-audit prep, SOPs, controls. - Operating Account Bookkeeping
Transaction coding, bank recs, A/P, A/R, cashflow cadence, monthly close. - Legal Billing Support
Prebill to final bill workflow, realization tracking, collections reporting. - Financial Reporting & Analysis
Matter P&L, practice-area analysis, partner distribution reporting, KPI dashboards. - Tax Coordination
Clean year-end packages, schedules, and support for your CPA.
Why Legal-Specialized > Generic Bookkeeping
Generalists often lack: IOLTA rules, three-way recs, matter-level tracking, legal billing nuance, and Clio/MyCase/Tabs3/PCLaw fluency.
Specialists bring CPAs + legal accountants who live in these systems and standards daily—reducing risk and time-to-accuracy.
The Legal Accounting Must-Haves (and How Outsourcing Delivers)
1) Trust Accounting & IOLTA Compliance
- System setup (matter-level ledgers, approvals, segregation of duties)
- Monthly three-way reconciliation: bank ↔ trust ledger total ↔ GL
- Audit pack: ledgers, supporting docs, rec reports, workflows
- Staff training + discrepancy resolution protocols
2) Matter-Based Financial Tracking
- Fully-loaded costs (attorney/paralegal time, direct expenses, overhead allocation)
- True matter and client profitability; invest in winners, prune drainers
3) Realization Monitoring & Lift
- By attorney, client, practice, matter type
- Billing narrative coaching, cycle discipline, discount controlsCollections rhythm (30/60/90), assignments, escalation
4) Operating Accounting Done Right
- Clean chart of accounts + matter coding
- Bank recs, AP/AR hygiene, payroll coordination, monthly close
5) Management Reporting & KPIs
- Financials with trends (P&L, BS, CF)
- Dashboards: Realization, DSO, RPA, margins, cash position
- Partner/attorney productivity views
Pricing: What Firms Typically Invest
Small (1–10 attorneys): $2,500–$5,000/mo
-
Core trust + operating accounting, monthly financials, basic matter tracking
Mid (10–30 attorneys): $5,000–$9,000/mo
-
Comprehensive trust, detailed matter P&L, multi-dimensional realization analysis, advanced reporting
Larger (30–50+ attorneys): $9,000–$15,000+/mo
-
Multi-office, cross-jurisdiction trust, sophisticated analytics, system customization, controller-level advisory
Cost Drivers: attorney count, transaction volume, trust complexity, tech stack, reporting depth, # of offices/practices.
Comparisons (annualized):
- In-house bookkeeper: $50k–$81k loaded; limited legal expertise; single-point risk
- Bookkeeper + Accountant: $125k–$175k loaded; adds management burden
- Outsourced: $30k–$180k; specialist team, coverage redundancy, scalable, no HR
Benefits Beyond Cost
- Eliminate trust risk: Controls + three-way recs + audit-ready documentation
- Lift realization: Typical +3–6 pts = $150k–$500k+/yr for mid-size firms
- Gain visibility: Matter/practice clarity drives confident strategy (hiring, panels, pricing)
- Reduce admin drag: Partners focus on clients; ops stops firefighting
- Scale smoothly: Add capacity without recruiting or training
How to Choose the Right Provider
Must-Haves
- Deep legal experience; law-firm references
- IOLTA + three-way reconciliation expertise in your jurisdiction
- Clio/MyCase/PracticePanther/Smokeball + PCLaw/Tabs3/QuickBooks (legal)
- Security posture (cloud, MFA, encryption, SOC 2)
- Reporting chops: matter P&L, realization, practice dashboards
Ask Directly
- “Walk us through your three-way reconciliation process.”
- “Show sample audit-ready packs.”
- “Which legal stacks have you integrated without forcing a platform switch?”
- “Share 2–3 references from firms like ours.”
Red Flags
- Generic shops “that can learn legal”
- Offshore-only teams with slow comms/compliance gaps
- Vague scope/surprise fees
- Forcing a platform change to fit their process
- No CPAs or professional standards
Transition Timeline (60–90 Days)
Weeks 1–2: Discovery & Assessment
Access, historical review, trust compliance audit, issue list
Weeks 3–6: Implementation & Cleanup
Chart-of-accounts cleanup, integrations, trust rec corrections, SOPs
Weeks 7–8: Parallel Run
Run side-by-side, train staff, finalize comms cadence
Week 9+: Full Cutover
First full monthly close, ongoing optimization
Getting Started
Outsourced, legal-specialized accounting turns accounting from a compliance headache into a strategic asset—clean trust, faster closes, clearer matter economics, and higher realization.
Exact Partners specializes in law-firm accounting—from solos to multi-office practices. CPAs + legal accountants, fluent in Clio/MyCase/QuickBooks, audit-ready from day one.
Schedule a consult: getexact.com • (716) 249-6434
