Accounting Records For The Lawyer in United States

Practical Information

Note: Some of this information was last updated in 1982

Business

Books of account must be kept regularly and accurately in a law office. Also, a monthly profit and loss statement should be prepared and evaluated so the law office can determine, on a month to month basis, the amount of profit, the percentage of net profit to gross incomes, and other areas important for accurate evaluation of the business entity. In most small offices, the principal secretary is also the bookkeeper. A basic bookkeeping course would be most helpful to the legal secretary who handles this task. Basically, it is essential that all receipts and all expenditures be recorded so at the end of the accounting period, whether it be monthly, quarterly, semiannually, or annually, an accurate statement of account (sometimes called “profit and loss statement”) can be prepared.

Trust accounts

The attorney should maintain a trust account for depositing funds belonging to others. These trust accounts can be used to close real estate transactions, to handle court costs, or to make alimony payments. It is unethical for an attorney to deposit trust funds in personal or business accounts. Secretaries who handle trust money should be extremely careful with records and disburse the funds only at the direction of the attorney who is responsible, lest the attorney be accused of mishandling the funds. Secretaries who assist in maintaining trust accounts should be extremely careful also to avoid over disbursements on any account. Therefore, each individual account balance should be maintained at all times, and any disbursement from an individual’s trust fund should be debited to that individual’s account immediately upon disbursement.

(Revised by Ann De Vries)

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