Best Practices for Legal Bookkeepers: Supporting Attorney Clients Through a Bar Audit
Jun 23, 2025As a legal bookkeeper, you play a critical role in helping attorney clients navigate the high-stakes process of a bar audit. Bar audits, conducted by state bar associations, scrutinize an attorney’s financial records, trust accounts, and compliance with ethical standards.
These audits can be incredibly stressful for attorneys, as any discrepancies could jeopardize their license to practice. Your expertise in organization, attention to detail, and proactive communication can make a significant difference in easing their stress and ensuring a smooth audit process.
Below are best practices for legal bookkeepers to support their attorney clients during a bar audit, with specific examples of how to assist with paperwork.
Maintain Impeccable Trust Account Records Year-Round
This tip goes without saying. Trust accounts are often the primary focus of a bar audit, as they hold client funds and are subject to strict regulations. To reduce audit-related stress, ensure that trust accounts are meticulously maintained well in advance of an audit announcement.
- Reconcile trust accounts monthly, ensuring all transactions are documented with clear descriptions (e.g., client name, matter number, and purpose of the transaction).
- Utilize accounting software like Clio Manage or QuickBooks, which offer trust accounting features, to track funds accurately.
- Maintain a separate ledger for each client’s trust account balance to prevent commingling of funds.
If an auditor requests a trust account reconciliation report, provide a detailed ledger showing all transactions for the audit period. This is why we recommend using the sub-liability method of tracking trust. It provides you with that ledger detail over the way, for example, Clio just dumps the data into the header. For instance, for a client named Jane Doe, you might produce a report like this:
Date: 03/15/2025 | Client: Jane Doe | Matter: Divorce Case #123
Deposit $5,000 (Retainer) | Balance: $5,000
Date: 04/01/2025 |Clien: Jane Doe | Matter: Divorce Case #123 |Withdrawal: $1,500 (Legal Fees) |
Balance: $3,500
This clear and organized report demonstrates compliance with trust account rules, reducing the attorney’s stress by presenting auditor-ready documentation. Of course, it is imperative to use the Bar Association’s forms for the request. Do not submit QuickBooks detail reports alone. They will be rejected.
Organize Financial Documents in Advance:
Bar audits often require extensive documentation, including bank statements, canceled checks, invoices, and billing records. Disorganized records can exacerbate an attorney’s anxiety and prolong the audit process.
Best Practice:
- Create a centralized, digital filing system for all financial documents, organized by category (e.g., trust accounts, operating accounts, client invoices) and date.
- Utilize cloud-based tools like Dropbox or Google Drive to securely store and share files with the attorney or auditor as needed.
- Anticipate common audit requests and prepare a checklist of required documents, such as trust account bank statements, client ledgers, and proof of IOLTA (Interest on Lawyers’ Trust Accounts) compliance.
Suppose the auditor requests proof that interest from the trust account was remitted correctly to the state’s IOLTA program. You can provide:
- A bank statement showing the interest earned (e.g., $50.23 for Q1 2025).
- A remittance confirmation from the IOLTA program, dated April 10, 2025, showing the transfer of $50.23.
- A memo noting the attorney’s compliance with IOLTA regulations.
By proactively organizing these documents, you save the attorney time and demonstrate their adherence to ethical standards.
Communicate Clearly and Proactively
Attorneys under audit may feel overwhelmed, so your ability to communicate clearly and anticipate their needs can alleviate stress. Act as a calming and confident partner throughout the process.
Pro Tip:
- Schedule a pre-audit meeting with the attorney to review the audit notice, discuss required documents, and outline a timeline for preparation.
- Provide regular updates on document preparation and flag any potential issues (e.g., missing records or unclear transactions) early.
- Translate complex financial data into concise summaries to help attorneys understand what auditors are reviewing.
If you notice a discrepancy in a trust account (e.g., a $200 withdrawal lacking a clear purpose), notify the attorney immediately and work together to resolve it. You might prepare a corrected ledger entry:
Original Entry: 02/20/2025 | Withdrawal: $200 | Description: None | Balance: $4,800
Corrected Entry: 02/20/2025 | Withdrawal: $200 | Description: Payment to Court Reporter for Smith v. Jones
Balance $4,800
Provide the attorney with a memo explaining the correction and attach supporting documentation, such as the court reporter’s invoice. This proactive approach prevents surprises during the audit.
Educate the Attorney on Audit Expectations
Many attorneys may not fully understand what a bar audit entails, especially if it’s their first one. As their bookkeeper, you can reduce stress by demystifying the process and setting clear expectations.
Best Practice:
Share a concise guide or checklist outlining common audit focus areas, such as trust account compliance, billing practices, and record retention.
Explain the importance of transparency with auditors and encourage the attorney to disclose any known issues upfront.
Offer to liaise with the auditor to provide documents or clarify financial records, reducing the attorney’s direct involvement.
Example:
Create a one-page audit checklist for the attorney, including items like:
- Trust account bank statements (last 12 months).
- Client trust ledgers for all active matters.
- Billing records showing fees earned and transferred from trust to operating accounts.
- Proof of compliance with state bar recordkeeping rules (e.g., retaining records for 5–7 years). I always keep them for one year more than the bar rules indicate.
Best Practice:
Review the attorney’s financial records as if you were the auditor, checking for common red flags like unreconciled accounts, missing documentation, or improper fund transfers.
Use state bar guidelines (available on most state bar websites) to ensure compliance with local rules.
Present findings to the attorney with actionable recommendations to address gaps.
During your final review, you might discover that some client invoices lack detailed descriptions of services rendered, which could be a requirement. You could revise an invoice from saying, Legal Services, $2,000 to
Legal Services for Smith v. Jones, including 5 hours of deposition preparation and 3 hours of court appearance on 03/10/2025, $2,000
Share the revised invoices with the attorney and implement a template for future billing to ensure compliance.
Provide Emotional and Professional Support
Most attorneys are terrified of an audit, even a random one. As their bookkeeper, you can offer reassurance by demonstrating your competence and commitment.
Conclusion
A bar audit is a daunting experience for any attorney, but as a legal bookkeeper, you have the power to make the process manageable and less stressful. By maintaining impeccable records, organizing documents proactively, communicating clearly, educating your client, conducting mock audits, and offering emotional support, you can guide your attorney through the audit with confidence. Your expertise not only ensures compliance but also strengthens your partnership with the attorney, positioning you as an invaluable ally in their practice.
Start implementing best practices today—before that dreaded audit letter! Review your attorney clients’ trust accounts, create a document checklist, and schedule a meeting to discuss audit preparedness. Your proactive approach will pay dividends when an audit arises, helping your clients navigate the process with ease.
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