Trust Account Management

Trust account management is an essential component of working with trust funds. If your firm is based in Australia, and you are required to be trust-compliant, you can follow the directions in this article. This article covers how to record money paid into and out of firm trust accounts, create and maintain trust accounts in Clio, create trust payments and receipts, manage trust reconciliations, generate trust reports, and more.

Enable trust account compliance

Before getting started with trust account management in Clio Manage, you need to enable the compliance feature in your Clio Manage account. Only administrators can enable this feature, but once enabled, any firm user can use its components. 

Step 1: Verify that your mailing address in Clio Manage is set to Australia

1. Go to Settings Accounts and Payment Info.
2. Select the Account Info tab.
3. Scroll down to Mailing Address.
4. Under Country, select Australia. 

Step 2: Enable trust account compliance

1. Go to Settings Firm Preferences.
2. Select the Compliance tab.
3. Check the box for Apply the relevant legal trust accounting rules and regulations based on the state specified in your address.
4. Check the box to Enable Trust Accounting Rules.

Create trust accounts

Once you have enabled trust account compliance for your Clio Manage account, you will need to create a new trust account or multiple trust accounts, depending on your firm. Within the new trust account(s), you will be able to view account details, transactions, receipts, and reconciliations. 

1. Go to Accounts and then select New account.
2. Under Account type, select Trust Account.
3. Under Trust account type, select either General Trust or Controlled Money.
   • If the trust account is for multiple matters or a Legal Society statutory deposit, select General Trust.
   • If the trust account is for just one matter, select Controlled Money.
4. Under Account status, select Open.
5. Complete the remaining fields as required.
6. Click Create New Bank Account.

Bring matter trust balances into Clio

After you enable trust account compliance and create trust accounts in Clio, you can record client balances. First, reconcile your trust account in your previous system, and then generate a report on trust client balances (i.e., Trust Trial Balance Report). Use this report to record existing balances and any statutory deposits. For transactions made after reconciliation or for uncleared payments, be sure to enter the original transaction date when recording the new receipt.

Step 1: Prepare data

Before you can bring trust balances into Clio from a previous system, reconcile your trust account for the last full month and generate a report for the matter trust account balances.

1. Reconcile the trust account in your previous system at the end of the month.
2. Run a Trust Trial Balance Report.
   • This report might have a different name in other systems.
3. Locate the matter balances at the end of the month to reach each row on the Trial Balance Report.

Step 2: Record existing matter trust balances

Once the total matter trust balances are reconciled, create a new receipt in Clio for each matter listed on the report. You can also record any uncleared payments and deposits to your Law Society.

1. Go to main Accounts and select your Trust Account.
2. Click New receipt and complete the required information:
   • Date: enter the last day of the previous month.
   • 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.

Step 3: Reconcile and review

1. After you bring existing client matter balances into Clio, you will need to complete the first reconciliation by the deadline.
   • You can request a match of the original balance forward input dates to the transaction date. This option is available only for your FIRST reconciliation in Clio.
2. Ensure the trust balances from your previous system match the Trial Balance report in Clio.

Create, view, and download trust receipts

When you receive funds from a client for a specific matter, you can create a trust receipt to record the funds. Once created, each transaction will have its own automatic receipt number under the Transactions column of the receipts table. You can also view and download any of your recorded trust receipts.

Create, view, and download trust deposits

When you record a cash or cheque receipt, you are also required to create a deposit record. You can then show this record to your banking institution to deposit the funds.

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, Australian law firms are required to deposit a prescribed amount out of the money that is held in a general trust account into an ADI account maintained by the Law Society. Your firm is required to make deposits into the statutory deposit account by the dates specified by your law society each year. 

Step 1: Calculate the amount to be deposited

1. Go to the Statutory Deposit Calculator on your Law Society's website.
2. Calculate the amount that needs to be deposited into the statutory deposit account.
3. Pay the amount owing into 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. If you do not already have a trust funds bank account in your Clio account, create a new one. Learn more about creating trust funds accounts here.
5. Record a new payment from the general trust account into the matter. Learn more about recording trust funds transactions here
   • Amount, enter the amount that you paid to your Law Society
   • Client, select the client you created for your Law Society.
   • Matter, select the matter associated with your Law Society.
   • Source/Recipient, enter the name of your Law Society (i.e., Law Society of New South Wales).
   • Description, enter Statutory Deposit.

Record and view trust payments

You can use funds from a trust account to pay bills and third-party expenses. You can pay third-party bills from trust by either recording a trust payment directly to the third party or by recording the expense on a bill and apply trust funds to the generated bill. When a transaction is recorded, you can view it in the trust account. Each transaction will have its own automatic receipt number under the Transactions column of the receipts table. 

Void cheque payments

In order to comply with Australia trust account compliance rules, you are required to record all cheques. If a cheque is damaged and you need to void it, you can record a transaction of the voided cheque. 

1. Go to Accounts and select the appropriate trust account.
2. Click New payment.
3. Under Payment type, select Cheque and add the reference number for the damaged cheque.
4. Select the box next to Void Cheque.
5. Under Reason, enter the reason why you are voiding the cheque.
6. Click Record transaction.

Transfer trust funds between matters

If you need to move funds between matters or bank accounts, you can record a transfer transaction. One example why you may need to do this is if a client has multiple matters with your firm and requests funds to be moved between their matters. Once the transfer is recorded, there will be two transactions in the trust account—one will show a debit (funds out) and the other will show a credit (funds in). Both transactions will have the same journal reference number. 

1. Go to Accounts and select the appropriate trust account.
2. Click Transfer funds.
3. Select Between matters.
4. Under Client, select the client for this transfer.
5. Under Source, select the matter that funds will be taken from.
6. Under Destination, select the matter that will receive the funds.
7. Under Amount, enter the dollar amount of the transfer.
8. Under Authorised by (Person 1), select the firm user who will approve the transfer.
9. Complete any remaining details and then click Record transfer. 

Cancel transactions

If you record a trust transaction incorrectly, you cannot edit the transaction. You can correct an error on a recorded trust transaction by cancelling the incorrect transaction and creating a new trust transaction. Once cancelled, you will see a new transaction with the same receipt number as the original transaction. This transaction will show as a debit (funds out) and have a description that specifies it is a reversal of the original transaction.

Perform trust account reconciliation

Trust account reconciliation compares trust transactions in Clio Manage with transactions from your bank during a given month. You are required to perform reconciliations monthly within a few days after the end of the month. 

Step 1: Record trust transactions, receipts, and deposits in Clio

Before beginning a reconciliation, you need to record all trust transactions and trust receipts, and create bank deposits, for the reconciliation period in Clio Manage. Learn more about trust funds reconciliation in Clio Manage here.

Step 2: Create reconciliation adjustments

If you have discrepancies in a trust account, you can add adjustments to calculate the adjusted balance. You can either deduct funds or add new funds into the trust account. 

1. Go to Accounts and select the appropriate trust account.
2. Click Add adjustment.
3. Complete the required fields.
4. Click Add.