IOLTA reconciliation example: a solo attorney's month where all three totals agreed and the client ledgers were still wrong

An IOLTA three-way reconciliation compares the adjusted bank balance, the trust journal and the total of the client ledgers on the same date. When all three agree, the account as a whole is in balance. It doesn't prove each client's balance is right: money posted to the wrong client leaves the totals unchanged. That's why the client listing gets read line by line, not just added up.

Here's a made-up month that shows both halves.

The firm

Delacroix Law Office is fictional: one attorney, one paralegal, one IOLTA account. The September 2026 statement closes on September 30 at 27,940.00.

Step 1: adjust the bank balance

Two items haven't cleared:

• A 3,500.00 retainer from a new client, Reyes, deposited after the bank's cutoff on September 30. A deposit in transit.
• Check 1108 for 650.00 to a process server on the Tan matter, mailed September 28. An outstanding check.

Adjusted bank balance: 27,940.00 + 3,500.00 − 650.00 = 30,790.00.

Step 2: the trust journal

The firm's trust register shows a balance of 30,790.00 on September 30. It agrees with the adjusted bank balance.

Step 3: the client ledgers

The paralegal prints the client listing:

Client	Balance
Reyes	3,500.00
Tan	1,350.00
Whitfield	17,640.00
Bauer	8,300.00
Total	30,790.00

All three agree at 30,790.00. On the totals, September reconciles.

Step 4: read the listing, don't just add it

The attorney looks down the list before signing, and Tan's balance looks low. Tan paid a 2,000.00 retainer in August and a 1,200.00 cost deposit on September 9 for the process server and filing fees. After check 1108 for 650.00, she should have 2,000.00 + 1,200.00 − 650.00 = 2,550.00. Her ledger says 1,350.00, exactly 1,200.00 short.

Whitfield's balance is 1,200.00 higher than the attorney expects, at 17,640.00 instead of 16,440.00.

The September 9 deposit was posted to Whitfield's ledger instead of Tan's. The money is in the right bank account and the journal recorded it correctly, so the bank and the journal agree. The client total is unchanged too, because 1,200.00 moved from one client to another inside the same total. Only reading the list finds it.

It matters more than it looks. If Whitfield's matter had settled that week, the firm might have paid Whitfield 1,200.00 of Tan's money.

Step 5: fix the record that's wrong

Move the 1,200.00 deposit from Whitfield's ledger to Tan's. Tan becomes 2,550.00 and Whitfield 16,440.00. The listing still totals 3,500.00 + 2,550.00 + 16,440.00 + 8,300.00 = 30,790.00. The bank and the journal don't change; the error was only ever in the client ledgers. Write down what was fixed and why.

Step 6: sign, date and keep

Keep the statement, the adjusted bank balance, the journal balance and the client listing together, with a note of the fix. Most state rules, built on ABA Model Rule 1.15, require complete trust records to be kept for years; five years after the representation ends is the Model Rule's figure. Check your state bar for its own rule and for how often it requires the reconciliation.

The lesson

Agreement of totals is necessary, not sufficient. A misposting between clients is invisible to the three-way totals and very visible to anyone who knows the matters. Read the list every month.

The full method, a firm-sized worked example and the records to keep are on our IOLTA trust accounting page.

Disclosure: I'm Damin and I run ZeraBooks. Our ledger keeps the trust bank account and the client trust funds liability and proves both against the IOLTA statement every month, which is the bank-to-journal half of this. It doesn't keep a ledger per client; that stays in your trust accounting or practice management software. More on AI bookkeeping.