Louisville, KY – Bookkeeping for Law Firms: Trust Accounting & Compliance Tips

For law firms in Louisville, good bookkeeping isn’t just about clean financials—it’s a matter of compliance and professional responsibility. Between client trust accounting, strict bar association rules, and the constant flow of operating expenses, legal bookkeeping brings a unique set of challenges.

At Chamberlain & Good Company, we’ve worked with attorneys and firm managers who want peace of mind knowing their books are in order—and their license is protected. Here are the top bookkeeping and trust accounting tips we share with our law firm clients to help them stay compliant and confident.

1. Understand the Rules of Trust Accounting

Trust accounts (also called IOLTA accounts) are not ordinary business accounts. They’re governed by specific rules that vary by state, and failure to follow them can result in serious disciplinary action.

In Kentucky, client funds held in trust must be kept separate from the law firm’s operating funds, with meticulous records showing exactly how much belongs to each client. Mixing funds—even by accident—is a major violation.

We help law firms maintain clear records and reconciliation systems to track every dollar in and out of the trust account, ensuring they’re always audit-ready.

2. Reconcile Trust Accounts Monthly (At Minimum)

Even if no one asks for it, you need to reconcile your trust accounts every month. That means comparing the bank statement, the trust ledger, and the individual client ledgers to ensure all balances match.

Many firms overlook this task—or don’t do it thoroughly—which increases the risk of error and noncompliance. We recommend scheduling this as a recurring task or outsourcing it entirely to make sure it’s done right, every time.

3. Keep Detailed Client Ledgers

Every client whose funds are held in trust should have their ledger. This isn’t just good practice—it’s required. Each ledger should reflect deposits, withdrawals, and the current balance specific to that client.

If you ever face an audit or dispute, these ledgers are your first line of defense. We help firms create templates and implement software that makes this easier to maintain without it becoming a burden.

4. Don’t Use Trust Funds for Overhead—Ever

This should go without saying, but it happens more than you’d think: law firms accidentally use trust funds to cover operating expenses, especially during tight cash flow periods.

This is one of the most serious ethical violations a law firm can commit. If your operating account is running low, that’s a financial planning issue, not a trust account solution. We work with law firms to create strong budgeting systems so you never have to risk compliance to pay the bills.

5. Choose Bookkeepers Who Understand Legal Requirements

Legal bookkeeping is different from general business bookkeeping. If your bookkeeper isn’t familiar with trust accounting rules, they could unknowingly set you up for failure.

Our team at Chamberlain & Good Company is experienced in working with law firms and understands the financial, ethical, and procedural requirements that come with trust accounts. We build systems that are clean, transparent, and compliant—so you can focus on serving your clients, not stressing over your books.

Your Law License Depends on More Than Your Legal Skill

Don’t let bookkeeping be the weak link in your practice. Whether you're a solo attorney or managing a growing firm in Louisville, we’re here to help you stay compliant, organized, and financially confident.

Reach out to Chamberlain & Good Company today to learn how our law firm bookkeeping services will keep your trust accounts in order and your firm protected.