Is three-way reconciliation required?

In many jurisdictions, yes. Requirements and timing vary, so check your state or provincial bar's trust accounting rules. Even where it isn't written into the rules, it's the standard way to show client funds are intact.

Who is responsible for the reconciliation?

The lawyers responsible for the trust account. Staff or an outside bookkeeper can prepare it, but a lawyer at the firm remains accountable for the trust account and should review the results.

Can software do three-way reconciliation automatically?

Legal accounting software can produce the reconciliation report from your records, which saves most of the manual work. Someone still needs to review the report, explain reconciling items, and sign off.

What is an adjusted bank balance?

It's the bank statement balance after adding deposits in transit and subtracting outstanding checks. It shows what the bank balance would be if every recorded transaction had already cleared.

What Is Three-Way Reconciliation for a Law Firm Trust Account?

Learn how to do a three-way reconciliation for a law firm trust account, with steps, a worked example, and what to do when the balances don't match.