Quicken: Not for Trust Accounting
August 19, 2011
Quicken may be great for some things like tax submissions and payroll, even general accounting, but not for lawyer trust accounting. Why? Because Quicken doesn’t alert you when you disburse more than you have on account for a particular client. In Quicken, you create subaccounts for each client within your trust account. But suppose you have $500 in the trust account for Joe Smith, and $400 in the trust account for Bob Jones. At the conclusion of the representation, you are supposed to disurse $400 for your legal fee from the trust account for Bob Jones. Through a key stroke error, your assistant prints a check for your legal fee as $500 instead of $400, and the check is deposited into your operating account. Quicken never warns you that your are writing a check for more than you have on account for Bob Jones because there is enough in the trust account as a whole to cover it. Yikes. If you have some money in the trust account to cover administrative fees or bank charges, then you might not have disbursed against another client’s funds. But you can’t keep too much in the account to cover accounting errors.
I strongly suggest that if you are using Quicken for your trust accounting, you look into software specifically designed for lawyers’ trust accounts. Most of the time this software is a time/billing and general accounting software as well. Many times, such software somes with a conflicts checking capability, another plus. The biggest advantage from a trust accounting perspective is that the software forces you to associate each transaction in the trust account with a client and it will not allow you to over-disburse against a client’s funds. Accounting is not my thing, so I need all the help I can get. I happen to use PCLaw for time keeping, billing, accounting and trust accounting, but there are many other programs out there as well. Shop around to find what suits your practice. You can probably continue to use Quicken for some things — just not your trust account. It just may save you from having to answer some tough questions from the State Bar.