If you run a law firm, you already know that handling client money comes with extra responsibility. Not just in a general “don’t mess this up” kind of way… but in a very specific, state-bar-mandated, audit-risk kind of way.
Whether it’s a client retainer or settlement funds, your IOLTA account has to be airtight. Every dollar in and out needs to be tracked, matched, and reported correctly.
But that’s easier said than done when you’re juggling client matters, court dates, and actual legal work. Most lawyers aren’t accountants. And most accounting tools weren’t designed with legal trust accounting in mind.
That’s where a thoughtfully chosen IOLTA accounting tech stack can make all the difference.
At Fleming & Associates, we work with a lot of law firms, and over the years, we’ve refined a tech stack that consistently works well for our clients. It’s not the only setup out there, and larger or more complex firms might use something different. But for the majority of the firms we work with, this setup works well in terms of simplicity, compliance, and efficiency.
Here’s the stack we use and recommend: QuickBooks Online, Clio, and LawPay. Each one plays a role in managing IOLTA trust accounting effectively, and together, they create a system that keeps your trust accounts clean and compliant, without burying you in spreadsheets.
QuickBooks Online: Your Accounting Foundation
QuickBooks Online (QBO) is the accounting engine in this stack. It’s not legal-specific, but it’s flexible, well-supported, and integrates nicely with both Clio and LawPay.
Most law firms use QBO to handle their day-to-day financials (income, expenses, payroll, and taxes). But for IOLTA purposes, it’s also how we reconcile trust account activity with the bank. Every trust transaction should be captured in QBO so you can run reports, catch issues early, and maintain clear financial records.
However, QBO by itself doesn’t understand the nuances of legal trust accounting. That’s why we pair it with tools like Clio to handle client-level tracking.
Clio: The Legal-Specific Layer
Clio is a legal practice management system that adds the legal-specific functionality QBO lacks, especially around client trust balances.
Say a client gives you a $5,000 retainer. In Clio, you can log that to the appropriate matter, track billable activity against it, and always see exactly how much money belongs to each client. That’s something QBO doesn’t do on its own.
Clio also makes it easier to handle transfers from trust to operating accounts. You generate an invoice in Clio, apply the payment from trust, and the system updates the client’s balance. Everything stays traceable and audit-ready.
Bonus: Clio integrates with both QBO and LawPay, helping to keep all your records synced.
LawPay: Built for Legal Payments
LawPay is a payment processor designed for law firms, and that matters more than you might think.
Unlike generic processors (like Stripe or PayPal), LawPay ensures trust and operating funds stay separated. When a client makes a payment, funds go directly into the appropriate account, either your IOLTA or your operating account. That separation is automatic, helping you stay compliant without extra manual steps.
Because it integrates with Clio, client payments show up in the right place without needing to be logged manually. From there, your QuickBooks records update to reflect the transaction.
How the Stack Works Together (And What to Watch For)
When QuickBooks Online, Clio, and LawPay are set up correctly and connected, they can seriously streamline your IOLTA accounting.
But like any system, it’s only as good as the setup.
Here’s what works really well, and a few things you’ll want to double-check as you go.
What Works Well
One of the biggest wins is that LawPay automatically deposits client payments into the right accounts. Retainers go into your IOLTA, earned fees go into your operating account, and the entire flow stays compliant.
Since LawPay is built for legal use, it’s designed to keep those funds separated from the moment the client pays. No awkward workarounds, no “oops” moments.
Clio handles the trust ledger side. That means you can see how much of your IOLTA balance belongs to each client, which is a huge deal during reconciliations. When you generate an invoice in Clio and apply a trust payment to it, Clio can update the client’s balance, apply the payment, and push that transaction over to QuickBooks.
QuickBooks Online handles the actual bank feeds and reports. It pulls in your IOLTA account transactions, so you can match those to what’s happening in Clio. When the sync is working as it should, everything lines up: client matter balances in Clio match the trust account activity in QBO, and you can run clean, clear reports for your records or for an audit.
Together, this setup allows for what’s called a “three-way reconciliation”:
- The trust ledger in Clio
- The trust bank account in QuickBooks
- The actual bank statement from your financial institution
And yes, Clio will generate that three-way reconciliation report for you. Huge time-saver.
What to Watch Out For
Now, all that said, this setup isn’t completely hands-off. There are a few things we see firms get tripped up on if they’re not paying attention.
First, the sync between Clio and QuickBooks isn’t perfect out of the box. You’ll need to double-check how things are mapped, especially your trust liability account and revenue accounts. If that mapping is off, your books won’t reflect the right information, and that can create problems down the line.
Second, Clio does not push every kind of transaction into QuickBooks. For example, internal Clio-only adjustments or certain edits to historical trust records may not show up in QBO. You’ll want to understand what is and isn’t syncing so that your books match your client ledgers.
Think of Clio as the source of truth for client-level trust balances, and QBO as the source of truth for your firm-wide financials.
Third, reconciliations still need a human eye. Even with good integrations, you should plan to review your trust account activity monthly. Make sure client balances match, no funds were moved improperly, and that the three-way reconciliation checks out. It’s faster with the right tools, but it still needs attention.
Lastly—and this one’s important—don’t assume your bookkeeper or office manager understands legal trust rules just because they understand QuickBooks. Legal trust accounting is a whole different animal.
If you’re not 100% confident your setup is correct, it’s worth getting a second set of eyes from someone who works with law firms regularly (Psst… that’s us!)
Is This Setup Overkill for a Small Firm?
Not at all.
In fact, we’d argue it’s more important for solo and small firms to get this right early. When you’re lean and busy, you don’t have time to fix accounting messes or scramble through audits.
This system takes a little effort to set up, but once it’s running, it’ll save you hours and a lot of stress down the road.
Plus, all three tools are cloud-based, easy to access from anywhere, and scalable as your firm grows.
Final Thoughts: A Setup That Works for Real Law Firms
We don’t recommend software just because it’s popular… We recommend it because it works.
We’ve helped dozens of law firms implement this exact setup with QuickBooks Online, Clio, and LawPay, and the results are always the same: cleaner trust records, fewer compliance headaches, and more time to focus on running the firm.
If you’re trying to figure out how to manage your IOLTA without spending hours in spreadsheets—or worse, risking a trust account violation—we’d be happy to help you get started. Setting up the right system now saves a lot of future clean-up later.
Want to talk through it? Head over to our Contact Page to book a call, and we’ll walk you through how to make it work for your firm. We’re always here to help.
Until next time!
