Three-way reconciliation

For any firm running an IOLTA account — the check most state bars expect you to run monthly.

Three-way reconciliation means your trust account bank balance, your trust account book balance, and the sum of every client's individual ledger balance all agree, to the penny, at the same point in time.

Why it matters for a solo or small firm

A firm can have a reconciled bank statement and still have a problem underneath it — one client's ledger overdrawn while another's is overfunded, netting out to a total that looks fine. Three-way reconciliation is the only check that catches that.

Example

Your IOLTA bank balance shows $42,000. Your ledger says $42,000. But adding up all 11 client sub-ledgers totals $41,400 — a $600 gap you need to trace before your next filing deadline.