Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

Critical Financial Pitfalls in Legal Accounting #legalaccounting #lawfirms

11 Feb 2026 · 1 min

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In this segment, the presenter, who works closely with attorneys, calls out common but serious mistakes that law firms and their advisors make in financial management. He highlights four key problem areas: (1) providing incorrect advice on advanced client costs, leading to misallocation of fees; (2) mishandling trust accounts by treating them like regular operating accounts, which violates fiduciary rules; (3) making improper year‑end journal entries that obscure the separation between trust and operating funds; and (4) broader compliance failures that cannot be brushed aside with a simple journal entry. The speaker emphasizes that trust funds and operating funds are distinct businesses and that proper compliance is essential for law firms.

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No, I work with attorneys and started asking me questions and I was like, I could clearly, very succinctly, you know, realize no, no, and no. Why the heck are you working with them? You're advising incorrectly on advanced client cost. You're advising incorrectly on the trust account. You're booking things in journal entry at the year end in the incorrect way. That's not how you handle trust funds with operating and as a business. It is not the same business. I'm sorry, friends. No. And there's so much compliance. And needs that happen inside these firms. You can't just brush it under in a journal entry. Just doesn't work. No, and that's something we see sometimes too.