The cloud-based program has also now expanded to provide operational accounting for law firms.
TrustBooks was created in 2015. It is a cloud-based program that not only makes trust accounting easier for lawyers, and is geared toward legal accounting, it has also now expanded to provide operational accounting for law firms. This is the only trust accounting software we have seen that is geared specifically to legal trust accounting.
The website for the program can be found at https://trustbooks.com/.
We spoke with co-founder Tom Boyle to learn more.
- How did TrustBooks come about? You obviously saw a need out there and wanted to fill it. How does TrustBooksdo that? I believe you said you started this in 2015?
TrustBooks started as a pain point that I personally experienced running my CPA practice. In 2010, I started a CPA firm that specialized in helping law firms with their accounting. In this role, I had to immediately become a trust accounting expert. I did, but the challenge was trying to use all the tools that existed to handle a law firm’s trust account (for example QuickBooks and Excel). These tools are not designed for a lawyers trust account, so it was a real challenge to try and manipulate the software to work for law firms. My team and I were the experts in QuickBooks and Excel, and we had a ton of difficulty using the products and wasting time recording the trust activity in multiple spots. That’s when the light bulb went off for me. I teamed up with my co-founder, Chad Todd, and we worked on a solution to make trust accounting drop-dead simple. We wanted a tool that was built specifically for attorneys, not accountants. We wanted to speak in non-accounting terms so that lawyers and their staff can easily jump into TrustBooks, manage their firm’s trust account, and stay compliant in their state. We started in 2015 and have been building and growing TrustBooks over this period. We’re loving being the trust accounting experts!
- What are the main differences between TrustBooks and other products out there that lawyers may be using?
The other products (think QuickBooks, Xerox, Excel, etc.) are built for accountants to be used for all industries. We are built for attorneys. We mirror the same workflow that exists in law firms and speak in simple and easy terms that anyone can understand. For example, you jump into TrustBooks and you need to create a client, then record a deposit, and finally make a payment. It’s that simple and TrustBooks will make sure that all your trust activity shows up in the right buckets to meet your state’s trust rules. On top of this, we have unique trust accounting features like always maintaining client ledgers, never deficit spending on a client’s balance, and automatically generating three-way reconciliations every time you reconcile. We also integrate with the leading legal tech software like Clio and LawPay to eliminate any need for duplicate data entry.
- It sounds like TrustBooks can help simplify the Trust Accounting process for lawyers, and take away the “stigma” that some lawyers see in trust accounting. Is that accurate?
Absolutely. We believe that trust accounting can and should be an easy process in your law firm. We hate the anxiety and fear that the trust account invokes with attorneys. If you’re using the right software, trust accounting does not need to be overwhelming. It can be a routine and simple task in managing your firm.
- You talk about the “behind the scenes” stuff that TrustBooks does with regard to trust ledgers and individual ledgers. Can you explain that?
TrustBooks is built specifically for small law firms and this allows us to design workflows that meet State Bar trust rules. For example, every time you record a deposit or a payment, you have to assign it to a client. You literally cannot record a deposit or payment without assigning to a client. This is simply part of our design so there are no extra steps that you need take to get here. Why this is important is that it allows the trust ledger and the individual client ledgers to update automatically and remain in-sync with every transaction that gets recorded. You literally cannot get your trust ledger and sum of client ledgers out of sync because of our design. You get a very different story when you compare this feature to QuickBooks. QuickBooks has no concept of client ledgers or three-way reconciliations, so it is easy (and very common) to get your records out of balance when using QuickBooks. If you don’t setup your QuickBooks file exactly correct or you forget to update a journal entry in QuickBooks with all the right chart of accounts, it can create a snowball effect of getting the sum of your client ledgers and your trust ledger out of balance with each other. This can be a HUGE headache… I know because I’ve been there when I used to have my CPA practice.
- What are the main goals that you are trying to accomplish with TrustBooks?
Our goal is to take the fear and anxiety out of the trust accounting process. To take it a step further, we want to take the fear and anxiety out of the entire legal accounting process. Legal accounting does not have to be scary and overwhelming. You don’t have to get frustrated with your firm’s accounting and outsource to a bookkeeper or spend hours and hours trying to do accounting. If you’ve got the right tool in place, it’s something that anyone can tackle. It’s giving attorneys more confidence and saving time when it comes to their accounting. We want to empower attorneys to start their own firm and focus on being a great attorney without getting bogged down in the administrative anxiety of trust accounting.
- Finally, you mentioned that you have expanded to now include operational accounting for law firms, in addition to trust accounting. That sounds like such a great benefit for law firms. Tell me more about that.
The recurring feedback we received from our users over the past 5 years was this: “We love how simple and easy TrustBooks is, we hate that we have to go back to QuickBooks for our firm’s operating account.” After hearing this over and over, we finally decided to do something about this. Sometimes you need to be hit over the head with a rock a few dozen times to see the path forward! In 2019, we started the next phase for TrustBooks to handle a firm’s operating account. This past January, we added the ability to manage your firm’s trust and operating bank accounts. This gives our users the ability to handle all their accounting needs inside TrustBooks. This allows us to be a complete replacement for other accounting software like QuickBooks. Again, we’ve built the operating account side to be 100% focused on a law firm’s needs. For example, we make it really easy to transfer funds from the trust account to the operating account and to show all the activity (trust and operating) at the client level. We kept our same workflows that have been so successful on the trust accounting side and added the ability to handle the firm’s operating accounts.
- What happens if the trust accounting rules change? Do you make changes in the software?
We do try and stay up to date on rule changes where it could impact what is needed from a software perspective. We haven’t seen a scenario in the past 6 years where a rule changed, and it caused an issue with their trust accounting software. With that said, we will try and enhance our software if there’s an updated rule change in a specific state. A good example of this is North Carolina – in 2016, they added a new Quarterly Review requirement. It’s the only state that has this requirement (each quarter, the attorney needs to review a minimum of 3 transactions and document their findings with these transactions). When this rule went live, we built additional features in our product that allows a North Carolina attorney to complete and document the Quarterly Review directly in our software. If other states have unique requirements like this and it’s a feature we can add to our software, we will absolutely look to build that unique feature.
State Bar of Wisconsin Ethics Counsel Aviva Kaiser on the TrustBooks Software program
Aviva Kaiser, Ethics Counsel at the State Bar of Wisconsin, recently took a close look at the TrustBooks program. She likes what she saw. “TrustBooks is software that makes the trust accounting process easier. And as far as I can tell, the transaction register and the individual client ledgers comply with the guidelines for recording the required information.”
Kaiser cautions, of course, that the lawyer is still responsible for following the rules and entering the numbers correctly. “But the nice thing about this software program is that I like how it provides a warning to prevent overdrafts as well as a warning if the transaction register and the individual client ledgers do not reconcile with each other and the bank statement.”
Another feature of the software that should appeal to lawyers is that it has the capacity for a lawyer to have both the standard IOLTA account and an E-Banking Trust Account, according to Kaiser.
Other features include:
- It integrates with LawPay, the online payment technology that many lawyers use,
- It separates out the deposits by client,
- It integrates with CLIO, the case management software preferred by many lawyers.