Trust Accounting Compliance Made Easy with Rocket Matter Pay

The basics of trust accounting 

Trust accounting typically involves lawyers holding and managing client funds in trust accounts, which are kept separate from personal and business finances. While some funds are the result of settlement or judgments, e.g., those following a personal injury lawsuit, clients also pay into trust accounts. These payments are typically for:     

• Unearned income, e.g., fees, cost advances, and retainers paid to a firm before services are rendered  
• Advances for costs anticipated to be incurred during a legal matter  
• Third-party funds, e.g., funds from the sale of client property or funds intended as payment for third-party services 

While trust accounts have traditionally been funded by cash or check deposits, today’s legal clients also use online payment to add money to trust accounts.  

The two main types of trust accounts 

There are two main types of accounts: separate and pooled. A separate trust account is set up for an individual client to hold large settlements or fees specific to their case over a longer time span. 

A pooled trust account houses funds from multiple clients and is best for situations where multiple clients need similar services or pay smaller amounts. One account holds each client’s balance and tracks each one separately, eliminating the need for individual bank accounts.  

One of the most common pooled accounts is the Interest on Lawyers’ Trust Account (IOLTA), a program in which interest from the account funds public service programs. 

Trust accounting rules     

While the ABA’s Model Rules of Professional Conduct outline trust accounting standards, each state bar association has its own unique rules, which are updated periodically. It’s vital for attorneys to refer to both the ABA and their own jurisdiction for guidance on compliant trust funds management. 

In general, though, there are some rules all lawyers must abide by:  

• Always keep client funds separate from your firm’s money. 
• Maintain meticulous records of the source of every deposit and the reason for every withdrawal. 
• Complete regular reconciliations with bank statements. 
• Send clients regular statements about their balances. 
• Transfer earned fees from the trust account to your operating account quickly. 
• Never borrow from the trust for personal use or business funding. 

4 ways Rocket Matter Pay makes trust accounting compliance easy 

Trust accounting compliance is intricate, and juggling those intricacies requires a great deal of attention. But with Rocket Matter Pay, you don’t have to oversee a three-ring circus of client funds, reconciling accounts, and dispersing payments. 

Let’s explore four key ways Rocket Matter Pay helps you avoid common challenges attorneys face with trust accounting.  

1. Separation of funds

Managing trust accounts requires you to keep client funds separate from firm assets, so it requires meticulous monitoring. It can quickly get overwhelming, no matter how experienced you are. 

Rocket Matter Pay helps you eliminate overwhelm by letting you use a merchant account for trust that is separate from operating accounts. This gives you maximum control over which account funds go into, eliminating the risk of commingling client and operational funds.  

Even better, the software automatically checks for compliance with industry regulations, so you don’t have to. You get true peace of mind knowing there’s much less chance of error and all funds are allocated correctly. 

2. Processing fees assessed to operating accounts 

Rocket Matter Pay makes creating compliant accounts easy by withdrawing processing fees from credit card payments from your operating account at the end of the month. 

This safeguard allows law firms to uphold their responsibilities for compliant fee handling. Because the operational account is designated for processing fees, attorneys never have to worry that client trust accounts will get hit with these fees.  

The benefits aren’t limited to compliance (although, yes, that’s a big one!). By automatically withdrawing processing fees from operational accounts, accounting workflows are less complicated and at less risk for errors.  

It also helps legal practices build accounting processes based on transparency. This transparency reinforces client trust and demonstrates the practice’s commitment to ethical billing practices.  

3. Compliant accounts and invoices

Attorneys face two major compliance challenges:  

1. Generating invoices that adhere to ABA and IOLTA standards   
2. Creating and maintaining compliant trust accounts 

Both require a lot of work.  

You have to handle advance payments accurately, itemize every action, and allocate funds appropriately. Manual account management can be error-prone, time-consuming, and complex, leading to involuntary non-compliance and potentially severe consequences. 

Generating detailed, compliant invoices is also straightforward thanks to innovative features such as: 

• LEDES billing 
• Detailed line items and deposits 
• Customizable invoice templates 

4. Multiple trust accounts

Juggling multiple trust accounts can feel like walking through a hall of mirrors, especially when managing complex cases with separate funds or multiple clients—it’s hard to know what is what. Each account added increases the risk of errors, and keeping each account compliant with state and federal regulations is more difficult. 

Managing it all can eat up your time and resources that could be spent on billable legal work, building client relationships, and enhancing service delivery—the bread and butter of a successful law firm.  

Rocket Matter saves the day with easy-to-use, intuitive tools that create, monitor, and manage separate accounts for different matters or clients seamlessly. You can transfer funds between accounts and maintain clear, detailed records for each with minimal effort. This simplification reduces the administrative burden on your team, so you can spend less time on financial management and more time growing your practice. 

Take the stress out of trust accounting compliance with Rocket Matter Pay 

Trust accounting is complex and challenging. But it doesn't have to be a chore that pulls you away from more important matters. With the right trust accounting software solution, you can turn this complex responsibility into a streamlined, effortless part of your practice.  

Rocket Matter Pay is here to help! Whether you’re managing multiple accounts, separating processing fees, or creating detailed invoices, we’ve got it all covered, and we keep you compliant. 

Are you ready to tame the confusion of trust accounting processes? Schedule a demo today to learn how to manage trust accounts efficiently and hassle-free.