LawAccounting vs Xero for law firms
Xero is good cloud accounting software for the parts of running a firm that every business shares. LawAccounting is built around matters, with trust accounting, client costs, legal billing, documents and client payments in one platform.
Trust ledgers by client and matter.
A real trust balance for every client, three-way reconciliation and overdraft alerts, instead of tracking categories.
Client costs tracked as advances.
Hard and soft costs recorded by matter, with client cost advances kept apart from firm expenses.
Billing and books in one place.
Legal billing, LEDES, matters, documents and client payments share the same records as your ledger.
LawAccounting vs Xero at a glance
How legal accounting software compares to Xero on the work a law firm does every month.
| Area | LawAccounting | Xero |
|---|---|---|
| General ledger and financial statements | Yes. Double-entry ledger, balance sheet, P&L, trial balance and cash flow. | Yes. Standard ledger and financial statements. |
| Bank feeds | Yes. 15,000+ bank connections, with automatic matching. | Yes. Bank feeds and bank reconciliation. |
| Time tracking | Yes. Time entries recorded against matters. | Yes, through Xero Projects. |
| Client and matter trust ledgers | Built in. A separate trust balance for every client and matter. | Approximated with tracking categories or contact reports. |
| Three-way trust reconciliation | Built in. Bank, trust ledger and client totals in one view. | Two-way only. Bank to books. The client total needs separate work. |
| Overdraft and commingling alerts | Yes. | No. No limit on a single client's trust balance. |
| Trust-to-operating transfers | Automated, with an approval trail. | Manual entries. |
| Client cost advances | Hard and soft costs by matter, with advances tracked apart from firm expenses. | Depends on coding. Often corrected with journal entries at month end. |
| Legal billing | Hourly, flat-fee, contingency, retainer and hybrid, plus split billing. | Hourly and fixed-price invoices from Xero Projects. |
| LEDES and UTBMS | LEDES 1998B and XML, with UTBMS task and activity codes. | No LEDES export. |
| Realization and profitability | By matter, attorney and practice group, with WIP, realization and budget vs actual. | Project profitability through Xero Projects. |
| Settlement disbursements | Fee splits, liens and medical bills, with a client disbursement statement. | Not included. |
| Matters, documents and e-signature | Included. | Not included. Firms add separate software. |
| Client payments | Card and ACH, posted to the right client ledger, with trust and operating kept apart. | Online invoice payments through Stripe and other integrations. |
Why law firms look for a Xero alternative
Xero organizes around accounts, contacts and transactions. Legal accounting has to organize around matters, with each client's share of a pooled trust account tracked as its own balance. Most of the gaps below come from that difference.
Xero trust accounting vs matter-level trust ledgers
In Xero, firms usually set up a trust bank account and use tracking categories or contact reports to estimate each client's balance. That gives you a number, but nothing in Xero stops a payment that overdraws one client's share of the account.
In LawAccounting, every client and matter has its own trust ledger with a live balance. The system alerts you to overdrafts and commingling, moves earned fees to operating with an approval trail and produces trust reports for bar reviews.
Three-way reconciliation, not just bank reconciliation
Xero's bank reconciliation is good, but it compares two numbers: the bank statement and your books. Three-way reconciliation adds the total of every client's trust balance, and that third number is the one bar reviewers ask about. A firm can reconcile Xero cleanly every month and still have client ledgers that don't add up. LawAccounting shows all three in one view.
Client cost advances and hard and soft costs
When a firm pays a filing fee, an expert or a records request for a client, that money is an advance the client owes back, not a firm expense. Contingency firms can carry these advances for years. In Xero, getting this right depends on how each payment is coded, and many firms fix it with journal entries at month end.
LawAccounting separates hard and soft costs when they're entered, records client cost advances apart from firm expenses and tracks what's been recovered on each matter.
Legal billing software vs Xero invoicing
Xero Projects can track time and invoice hourly or fixed-price work. Law firms also bill contingency fees and retainers held in trust, and corporate and insurance clients often require LEDES files, which Xero can't export. LawAccounting handles each of these fee arrangements, produces LEDES 1998B and XML with UTBMS codes and adds a pre-bill review step and AR aging by matter.
Matter profitability and realization reporting
Xero reports profitability by project. Partners also need to know how much recorded time was billed, how much billed time was collected and which practice groups make money. That needs billing and accounting in the same system. LawAccounting reports WIP, realization and effective rates, plus profitability by matter, attorney and practice group, with budget vs actual.
Settlement disbursements
Personal injury and other contingency firms need to split a settlement between fees, liens, medical bills and the client. LawAccounting calculates the splits, tracks liens and produces a disbursement statement for the client.
Multi-office and multi-entity firms
LawAccounting runs multi-entity and multi-office accounting in one system, with consolidated reporting across offices and entities.
Practice management software with built-in accounting
Xero is accounting software, so firms run matters, documents and legal billing somewhere else and sync the two. LawAccounting is all-in-one legal software. Matters, documents with e-signature, billing, client payments and the general ledger share one set of records on Salesforce.
When Xero is enough for a law firm
Xero for lawyers works in the right setup. A firm with no trust account, no client cost advances and no e-billing clients can run Xero with Xero Projects or a separate time tracker and do fine. Its bank feeds are clean, its reporting is flexible and plenty of bookkeepers know it well.
Things change once the firm holds client money in trust, pays case costs on clients' behalf or bills corporate clients through LEDES. At that point the firm is keeping trust and cost records by hand, in software that can't apply the rules those records are held to.
How to migrate from Xero to LawAccounting
LawAccounting includes migration support for firms moving off general accounting software. Tell us how your firm uses Xero today, and we'll plan the move from there.
- Scope the move. Our team scopes your migration and quotes it before you commit.
- Move your data. We bring your accounting data into LawAccounting and set up your trust and operating accounts.
- Train your team. Training is part of the migration work, so your staff knows the system before you go live.
LawAccounting vs Xero FAQs
Can law firms use Xero?
Yes, for general accounting. Xero handles bank feeds, invoicing, payables and financial statements well. Trust balances by client, three-way reconciliation and client cost advances are where firms need workarounds.
Is Xero good for law firms?
It's good cloud accounting software, but it wasn't built for law firms. It has no matter records, no per-client trust balances and no LEDES export. Whether that matters depends on whether your firm holds client money, carries case costs and bills corporate clients.
Can Xero handle trust accounting?
Xero can hold a trust bank account and estimate each client's balance with tracking categories or contact reports. It won't stop a payment that overdraws one client's balance, and it has no three-way reconciliation report. LawAccounting keeps a trust ledger for every client and matter, with alerts and three-way reconciliation built in.
Can Xero be used for IOLTA accounts?
You can track an IOLTA account in Xero as a separate bank account. Keeping it within your state bar's rules depends on careful setup and a monthly reconciliation of client balances done outside Xero.
Does Xero do three-way reconciliation?
Not on its own. Xero reconciles your bank statement to your books, but matching both to the total of every client's trust balance needs a separate report or a spreadsheet. A simple test for any accounting tool: ask the vendor to show a three-way reconciliation report, with client balances included, produced inside the software.
Does Xero support LEDES billing?
No. Xero has no LEDES export, so firms convert invoices by hand or add a separate billing tool. LawAccounting produces LEDES 1998B and XML files with UTBMS codes.
Can Xero track time for law firms?
Yes, through Xero Projects, which is included in Xero's Established plan. It tracks time by project and creates hourly or fixed-price invoices. It doesn't handle matters, contingency fees, applying trust funds to an invoice or LEDES files.
How do you track client costs in Xero?
Most firms set up a separate account for client cost advances and code each payment to it by hand, or move costs out of expenses with journal entries at month end. LawAccounting records hard costs, soft costs and client cost advances against the matter as they're entered.
Can Xero track matter profitability?
Xero reports profitability by project. Realization, effective rates and practice-group margins need billing data that usually lives in another system. LawAccounting reports profitability by matter, attorney and practice group, with WIP and realization.
Do I need Xero if I use practice management software?
It depends on whether your practice management software has its own general ledger. Many tools sync billing to Xero or QuickBooks and leave the accounting there. LawAccounting includes the general ledger, trust accounting, accounts payable and financial statements, so you don't need Xero alongside it.
What should mid-sized law firms look for in a Xero alternative?
Look for trust ledgers by client with three-way reconciliation, client cost tracking by matter, LEDES billing, multi-office and multi-entity accounting, and profitability by matter, attorney and practice group. All of it should sit in one system with your matters and documents. LawAccounting covers each of these.
How do I move my law firm off Xero?
Start with a scoped migration plan that covers your accounting data and trust records. LawAccounting includes migration support, quotes each migration before you commit and includes training as part of the work.
Make your firm's trust and billing easier to run
See trust ledgers, client costs, legal billing and matters working in one system. Book a demo and we'll walk through a matter from the first trust deposit to the final invoice.