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Trust Account Compliance

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For law firms in Australia and New Zealand that handle trust funds and need to comply with legal trust accounting regulations, effective trust account management is crucial. This guide provides specific instructions on how to use Clio Manage to record financial transactions into and out of trust accounts, establish and maintain these accounts in accordance with Australian and and New Zealand standards, manage trust receipts and payments, perform trust account reconciliations, and more.

 

Enable trust account compliance

To start managing trust accounts in Clio Manage in a way that conforms to the requirements of your region, you first need to ensure that your firm's business address is correctly set for your country. Your address determines your compliance region, and when you first create account ledgers in Clio Manage, you will be able to confirm your compliance region. Refer to Manage Account and Payment Information to learn more about updating your account information, including updating your firm’s address.

Note: These trust account management features are certified by your Law Society. Administrators can add or update their firm’s address. Once this is done, those with Administrator or Accounts permissions can confirm their compliance region when creating the firm’s first trust account.

If you are new to Clio, you simply have to confirm your compliance region before creating your trust accounts in Clio Manage. This automatically enables enhanced trust accounting. If you are migrating from another system to Clio Manage, you will also have to import any trust account balances from your previous system to Clio.

  1. Create your trust account(s) in Clio.
    • If you are not migrating from a previous practice management system (for example, if you are a new firm), and you have no non-zero trust funds balances to enter, you can learn how to manage your trust funds in the article, Trust Account Management.
    • If you are migrating from a previous system, click Contact Clio. A Clio Migrations Specialist will help you to ensure all balances from your previous system are correctly entered into Clio Manage. You can also migrate your own balances according to the instructions below.

 

Record matter trust balances in Clio Manage

After enabling trust account compliance, and once you have set up your trust accounts in Clio Manage, you can record any existing client trust balances from a previous system.

Important: Do not complete this workflow if you are mid-migration. Contact your migration agent before proceeding to avoid potential data discrepancies.

Step 1: Prepare data

Before importing trust balances into Clio, reconcile your trust account in your previous system for the last full month, and generate a Trust Trial Balance Report (the name may vary in other systems). This report will provide the matter trust account balances you need to record.

Tip: Consult with a Trust Accountant during the migration process to ensure all financial details are handled correctly.

  1. Reconcile the trust account in your previous system at the end of the month or the day of your choosing.
  2. Run a Trust Trial Balance Report from your previous system.
  3. Locate the matter balances from the report at the end of the month, and continue to Step 2.

    Tip: Individual matter balances from the end of the month will help with accurate receipts in Clio. If you cannot locate the appropriate report, contact your previous system support team to ensure you export the correct balances.

 

Step 2: Record existing matter trust balances

Once you complete the trust balance reconciliation in your previous system, you will need to create a new receipt in Clio for each matter listed on the report to record the balance. You can also record Law Society deposits.

  1. Go to Accounts and select your Trust Account.
  2. Click New receipt and complete the required information:
    • Date: Enter the end date of your last reconciliation.
    • Payment type: Select EFT.
    • Received from: Enter the client's name.
    • Select the appropriate Client and Matter.
    • Amount: Enter the amount from the Trial Balance Report.
    • Description: Enter Balance brought forward from [previous system].
  3. Click Create Record transaction.

Tip: When adding new receipts for uncleared payments, record the original transaction date for compliance purposes.

 

Step 3: Reconcile and review

The reconciliation process at this stage is optional. While not required, we suggest reconciling the closing balances from your previous system to match the opening balances in Clio Manage.

Note: After recording opening trust balances, if you need to match the input date of the balances to the transaction date, contact Clio Support. This option is available only for your first reconciliation in Clio.

  1. After recording opening trust balances in Clio, reconcile the closing balance from your previous system to match the opening balances in Clio.
    • If you did not reconcile at the end of the month, reconcile to the date of the balance forwards.
  2. Ensure the trust balances from your previous system match the Trial Balance report in Clio.

 

Optional: Add uncleared payments

If your bank account had uncleared payments or trust transactions after your last reconciliation in the previous system, you will need to add these amounts to your trust account balance with a new receipt.

  1. Go to the main Accounts tab and select your trust account.
  2. Click New receipt, and complete the required fields.
    • Under Date, record the original transaction date.

 

Record Legal Society statutory deposit

Under s46 of the Legal Profession Uniform Law Application Act 2014 and s9 of the Legal Profession Uniform Law Application Regulation 2015 in Australia, law firms are required to deposit a prescribed amount from the money held in a general trust account into an ADI account maintained by their Law Society.

Important: Complete statutory deposits by the dates specified by your Law Society each year.

Step 1: Calculate deposit amount
  1. Go to the Statutory Deposit Calculator on your Law Society's website.
  2. Calculate the amount required for the statutory deposit.
  3. Pay the amount owed to your Law Society's ADI account.
Step 2: Record the payment in Clio Manage
  1. Confirm that trust account compliance is turned on for your account.
  2. Create a new company contact for your law society. Learn more about creating contacts here.
  3. Create a new matter for the contact. Learn more about creating matters here.
    • Under Matter description, enter Statutory Trust Deposit.
    • Under Practice area, select Statutory Trust.
  4. Go to the Transactions subtab and select your general trust account. 
    • If you recently enabled trust account compliance or do not have a general trust, create a new trust account in Clio Manage.
  5. Select New payment and complete the required fields.
    • Client: Select the Law Society contact.
    • Matter: Select the Statutory Trust Deposit matter.
    • Recipient: Enter the name of your Law Society (i.e., Law Society of New South Wales).
    • Description: Enter Statutory Deposit.

 

Perform trust account reconciliation

Trust account reconciliation is an essential part of working with trust funds. Clio Manage makes it easy for you to verify that your trust ledgers in Clio matches your bank account statements, helping you maintain compliance. Make sure that you regularly perform reconciliations according to compliance requirements applicable to your region.

Learn more about Trust Reconciliation in Clio.

 

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