Trust accounting: client funds that always reconcile
Nothing ends a legal career faster than confusion about client money. Justiora treats trust accounting as a structural property of the ledger — segregation is enforced by the posting engine, not by good intentions and a monthly spreadsheet.
The invariant: trust bank = client funds held
Every account holding third-party money is flagged is_trust at ledger level. From that flag, one rule follows and is checked on every posting: the balance of the trust bank accounts must equal the liability "client funds held" — permanently, not at month-end.
1100 Trust bank account Dr 15,000.00
2100 Client funds held Cr 15,000.00
The deposit is a liability the moment it arrives — it is the client's money, and the books say so. A transaction that would break the invariant simply does not post. There is no "fix it later": later never comes, and regulators know it.
Three-way reconciliation, continuously
The classic control asks whether three numbers agree:
- the bank's trust account balance,
- the ledger's trust account balance,
- the sum of individual client positions.
In most firms this is a periodic ritual assembled from exports. In Justiora all three live in the same system — bank lines imported via CODA or CAMT.053, ledger entries posted at source, client positions carried on every line — so the reconciliation view (v_trust_reconciliation) is a query, not a project. Divergence surfaces the day it happens.
Per-client positions, without a side spreadsheet
Because every ledger line carries its client and matter, per-client trust positions are not maintained separately — they are read off the ledger. Paying out a settlement, transferring earned fees from trust to office (with the required paper trail), or refunding a residual balance: each is a posting against the client's position, and a position can never go negative unnoticed.
The annual report your bar association expects
Belgian firms report annually on third-party funds. Justiora generates the rapport annuel fonds de tiers directly from the ledger — structural controls, a per-client statement (opening balance, movements, closing balance) and the year's reconciliations — as PDF or CSV. Because the underlying entries were balanced all year, the report is a printout, not an investigation.
Frequently asked questions
What is trust accounting in a law firm?
The management of money a firm holds on behalf of clients or third parties — settlements, deposits, escrow — in accounts segregated from the firm's own funds (in Belgium: comptes de tiers / derdengeldenrekening). The firm must be able to show, at any time, exactly whose money it holds and where.
What is three-way reconciliation?
It verifies that the trust bank balance, the trust ledger balance and the sum of individual client positions agree. Justiora runs this check continuously against the ledger rather than as a periodic spreadsheet exercise.
Can Justiora produce the annual third-party funds report?
Yes — structural controls, per-client statement of opening balance, movements and closing balance, and the year's reconciliations, generated as PDF or CSV, ready for the bar association's review.
Can trust money accidentally pay a firm expense?
No. Trust accounts are flagged at ledger level and the segregation invariant is enforced on every posting. An entry that would break it does not post.
Sleep well before the Ordre's review.
A 30-minute demo: deposits, payouts, three-way reconciliation and the annual report — live on the ledger.
Book a demo — finance@justiora.com