Global Sites Ltd ·
Client money is not the firm's money
Deposits for a land transaction, settlement sums awaiting payment out, money on account for a court filing: a law firm holds a lot of money that belongs to its clients. The Advocates Act and the accounts rules made under it expect advocates to keep that money separate from the firm's own, and to account for it client by client.
Keeping a separate client bank account is the easy part. Proving, at any moment, exactly how much of that account belongs to each client is where firms get into trouble.
The three records
Three-way reconciliation compares three records that should always agree:
- The bank statement for the client account
- The firm's client (trust) cash book, which records every receipt and payment
- The individual client ledgers, which show what the firm holds for each client
Why a two-way check is not enough
Many firms check that the bank statement agrees with the cash book and stop there. That proves the total is right. It does not prove that each client's share is right.
If a payment for Client A is posted to Client B's ledger, the bank and the cash book still agree. Client B's ledger now shows less than it should, and Client A's may show a payment the firm never made for them. Add the client ledgers together and compare them with the other two records, and the mistake shows up straight away.
The most serious warning sign is a client ledger below zero. It means the firm has paid out more for that client than it holds for them, so another client's money has covered the difference.
Where differences usually come from
In our experience most reconciliation differences come from a short list:
- M-PESA or bank deposits that arrive without a clear reference, so nobody knows whose money it is
- Receipts or payments posted to the wrong client ledger
- Bank charges taken from the client account and never recorded
- Cheques and transfers that are recorded but have not yet cleared
- Fees moved from the client account to the office account before they were billed
A simple monthly routine
Reconcile at least once a month, and promptly after the month ends rather than when the auditors ask. A routine that works for most firms:
- Get the client account bank statement for the full month
- Bring the cash book up to date and list any items that have not cleared
- Check that the adjusted bank balance agrees with the cash book
- Add up every client ledger and check that the total agrees with the cash book
- Look for any client ledger below zero and deal with it the same day
- Have a partner review and sign the reconciliation, and keep it on file
How Global Wakili handles it
We built Global Wakili, our legal operations platform, so this routine stops being a month-end scramble. Each client has a trust sub-account. Bank statements can be imported, and the platform reconciles the bank statement, the trust ledger and the client ledgers against each other. A payment that would take a client sub-account below zero is blocked before it happens, and every trust transaction is kept in a tamper-evident record.
Where to start
If your firm reconciles two ways today, add the third step this month: total the client ledgers and compare. If it reconciles by hand, time how long it takes. That number is the best argument for doing it differently.
Global Wakili launches on 15 November 2026. The first 50 firms to join pay for six months and get the full first year.
This article is general information, not legal or accounting advice. Your accountant can confirm what the current rules require of your firm.
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