Industry Accounting BlueprintABA Model Rule 1.15 trust accounting rules

Law Firms & Legal Practices Chart of Accounts

Name: Law Firms & Legal Practices QuickBooks Online Chart of Accounts Template
Creator: Ledgerbrook
License: https://creativecommons.org/licenses/by/4.0/

A law firm chart of accounts must strictly isolate client retainer funds into an IOLTA Trust Bank Account (1050) matched penny-for-penny to an IOLTA Client Trust Liability (2050). Retainers stay out of operating revenue until earned and billed, which prevents the commingling that most often leads to trust account discipline.

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QuickBooks Online Ready CSV

Includes all 34 numbered accounts, types, and official QBO detail types.

Download QBO CSV

Industry Gotchas

Key Accounts Most Bookkeepers Set Up Incorrectly

Account #1050Bank

IOLTA Trust Bank Account

Why It Matters:

Designated escrow account holding unearned client retainers. Interest is remitted by the bank to the state's IOLTA program, never to the firm.

⚠️ Common Mistake:

Commingling operating fee revenue or paying law firm overhead directly out of this account.

Account #2050Other Current Liabilities

IOLTA Client Trust Liability

Why It Matters:

Mirror liability representing unearned money owed to clients until billable work is completed and invoiced.

⚠️ Common Mistake:

Failing to tie out the sum of individual client matter ledger balances to this general ledger account.

Account #1250Other Current Assets

Advanced Client Costs (Reimbursable)

Why It Matters:

Tracks court filing fees, deposition transcripts, and expert witness retainers advanced on behalf of clients.

⚠️ Common Mistake:

Expensing advanced costs as law firm overhead, creating tax discrepancies when reimbursed by settlement proceeds.

Account #4010Income

Hourly Legal Fee Income

Why It Matters:

Recognizes fee revenue only once it is earned and billed to the client.

⚠️ Common Mistake:

Recognizing retainers as income the day the check clears the bank.

Account Hierarchy

Complete Law Firms Account Tree

Code	Account Name	QuickBooks Account Type	QuickBooks Detail Type
1010	Operating Checking Account	Bank	Checking
1020	Operating Payroll Checking	Bank	Checking
1050	IOLTA Trust Bank Account (Restricted)	Bank	Trust account
1100	Accounts Receivable - Billed Legal Fees	Accounts Receivable (A/R)	Accounts Receivable (A/R)
1250	Advanced Client Costs (Reimbursable)	Other Current Assets	Other Current Assets
1400	Prepaid Malpractice Insurance & Leases	Other Current Assets	Prepaid Expenses
1500	Office Furniture & Law Library	Fixed Assets	Furniture & Fixtures
1510	Computer Hardware & Servers	Fixed Assets	Machinery & Equipment
1590	Accumulated Depreciation	Fixed Assets	Accumulated Depreciation
2010	Accounts Payable - Vendors	Accounts Payable (A/P)	Accounts Payable (A/P)
2020	Firm Operating Credit Card	Credit Card	Credit Card
2050	IOLTA Client Trust Liability	Other Current Liabilities	Trust Accounts - Liabilities
2110	Payroll Tax Liabilities	Other Current Liabilities	Payroll Tax Payable
2510	Bank Term Notes Payable	Long Term Liabilities	Notes Payable
3010	Partner Capital Contributions	Equity	Partner Contributions
3020	Partner Equity Draws	Equity	Partner Distributions
3030	Retained Earnings	Equity	Retained Earnings
4010	Hourly Legal Fee Income	Income	Service/Fee Income
4020	Contingency Fee Settlements	Income	Service/Fee Income
4030	Flat Fee Retainer Revenue	Income	Service/Fee Income
6010	Associate Attorney Salaries	Expenses	Payroll Expenses
6020	Paralegal & Legal Assistant Wages	Expenses	Payroll Expenses
6030	Administrative Support Salaries	Expenses	Payroll Expenses
6040	Employer Payroll Taxes	Expenses	Payroll Expenses
6050	Legal Malpractice Insurance	Expenses	Insurance
6100	Legal Practice Software (Clio, MyCase)	Expenses	Office/General Administrative Expenses
6110	Legal Research Subscriptions (Westlaw, Lexis)	Expenses	Dues & Subscriptions
6120	State Bar Dues & Mandatory CLE	Expenses	Dues & Subscriptions
6150	Client Intake & Firm Marketing	Expenses	Advertising/Promotional
6180	Merchant Processing & Wire Fees	Expenses	Bank Charges
6200	Office Lease & Conference Suites	Expenses	Rent or Lease of Buildings
6220	Office Utilities & High-Speed Internet	Expenses	Utilities
6250	Document Shredding & Secure Storage	Expenses	Other Business Expenses
7010	Bank Financing Interest Expense	Other Expense	Other Miscellaneous Expense

Reconciliation Rules

Monthly Sanity Checks for Law Firms Files

✓Perform monthly three-way IOLTA reconciliation: Trust Bank Balance = Trust Liability = Sum of Client Matter Balances.
✓Transfer earned fee funds from IOLTA to Operating account via check or wire matching issued client invoices.
✓Review open Advanced Client Costs and ensure invoice reimbursement billing across active matters.
✓Confirm no individual client matter balance is negative at any point during the month.

Outsourced Production Capacity

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Frequently Asked Questions

Law Firms Chart of Accounts FAQ

How do I import this Law Firms chart of accounts into QuickBooks Online?

Download the pre-formatted QBO CSV file using the button on this page. In QuickBooks Online, click the Gear icon -> Import Data -> Chart of Accounts. Upload the CSV, map the columns (Account Number, Account Name, Type, Detail Type), and click Import. Ensure account numbers are enabled under Account and Settings -> Advanced -> Chart of accounts.

What accounting standard does this Law Firms chart of accounts follow?

This chart of accounts is designed around the ABA Model Rule 1.15 trust accounting rules. It groups direct operating costs, tax-sensitive accounts, and subledgers to ensure accurate gross margins and CPA tax preparation.

Can I customize this template for my specific business or firm?

Yes. Once imported into QuickBooks Online, you can add sub-accounts, rename categories to match vendor naming conventions, or delete unused accounts without breaking the core financial reporting hierarchy.