Three-Way Bank Reconciliation (Best Of)

Welcome to Accountants Law Pod, where accounting professionals and law firms converge, hosted by Linda Artesani, Sarah Prevost, and Stephen Libhart.

Welcome back to the podcast, everyone, and we've had a very heated discussion already this— just before we started the podcast. So everybody stop and take a deep breath.

Um, yeah. Center.

Better now? It's one of those weeks, right?

It is. It is.

So we are going to talk.

Are you guys—

Yeah. Oh, well, I'm fine. Linda's like, I'm fine.

I'm, I'm actually just discussing, um, client experiences, I guess, and kind of together like the 3 of us often do. And, um, yeah, and I told you my, my methodology of handling it client that's just a little bit cranky, Steve, I just sic Sarah on them, basically. A little mad bulldog. And I'm like, she handles it.

Sarah, I need to have you sign a contract with my company and have a little side job here. Let me get you to our director of moods.

How many times have we done that on the Law Lab? And we've been like, let's just— everybody goes, oh, Sarah, can I just steal you for a week? I'm like, nope, nobody can take Sarah from me. She's very good with the words.

Oh, man. It's very— yeah.

Sarah, you've been traveling. We're recording this in the middle end of July.

Yeah.

And where are you just back from? Share what you learned.

Had a wonderful time at Gusto Next with our team. And I was most injured by the fact that team members were thanking me from Linda's team for this opportunity from Linda and I. And that they were happy to be heard, not just from us, obviously, from the, the Gusto co-founders and project managers and some really key, wonderful people. So we had a really good time, and definitely for some, that broke them out of their shell. Because the next day was Misty, and Misty was doing the theater public speaking style crash course, and Yeah, it was honestly really good.

I'm a little jealous.

I saw her, I was like, oh, I want to be there.

I'm a little jealous because you got to meet our newest team member, and I heard everything went well. So I'm a little jealous, but I already adopted her. So she's one of my family.

Yeah, we joke about family members, but it was nice because having met her, giving her her cardigan, that's part of our—

Yes, she got a sweater. She had it on the other day, so it was really cool.

Yeah.

Yeah. Where does she live? Is she in your neck of the woods, Linda?

No, she's in the exact opposite corner. So she's up in Washington.

Oh, in Washington.

Okay. Yeah.

We seem to keep finding really great people up in Washington. Don't like the state taxes for payroll, but I have to say, we have good people there.

Fill us in on that payroll taxes up there, registering for payroll up there, handling the business up there. It is. Jesus, we could go on. I could do a whole bunch of things about all different states, but not going to do that today. What are we talking about today, Linda?

Today we're going to talk about triple checking and mastering the 3-way reconciliation, which is a topic we've touched on before, but we're going to bring it back because it was a very popular one and try to kind of revisit it. Because it's also, if you're just starting out working with attorneys, it's a confusing topic, I think. For most, most people, they're like, what is it?

It's confusing and it's scary for a lot of people.

Yes.

What happens when you have a non-trust bank account that the person accidentally used in the beginning because they didn't set up? How do you handle that? But they used it as a so-called trust account.

So they use their operating account for trust transactions. Is that what you're saying?

They use like a whole different style of an account. Like, let's say they were using a savings account or a market account, not a secondary operation account. But treated it like that, and yet it wasn't truly what it was supposed— so it's very confusing to—

Well, you know, I see that a lot where they'll use a money market account, and I often question that. It's like, why are we putting this in a money market? It should be— in our state, it should be a bank that's approved, an account that's approved by the Legal Trust Account Fund, the people who oversee it. And I often wonder about when I see money market, I'm like, is that interest real? Is that trust account interest or is that money market interest? Is it being calculated right?

Well, how do you— to that point, Steve, how do you account for that interest? Because it's really not allowed, right? In the sense of like it could be booked in, it goes, but it goes right back out, which is—

It goes right back out. Yes.

Yeah. Well, we've had an argument about what's a 2-way, what's a 3-way with a client. Because they had no third— they weren't using Clio, they weren't using LeanLaw, they weren't using any billing software. I said, well, you have a 2-way. And he insisted he had a 3-way. Couldn't tell me what the third piece was, but we had a very long discussion about— so we just, at that point, we just gave up and just called it a 3-way, even though it was a 2-way.

Because make him happy.

This is an attorney you weren't going to win that battle with. Um, for most, for the most part, we just kind of said, okay, you win. We'll call it.

Was it, uh, Linda, was the idea there to say your liability accounts? I'm trying to remember the logic.

He was saying the 3 parts were the bank account. Yeah. QuickBooks account. The liability account was the 3 ways. Okay.

So the bank account, the same bank account on the books was one of his prongs of this. I gotcha.

Okay.

Yeah. So he was saying that the sub-liability accounts, which he didn't have at the time, as I recall.

That's the funny part.

He had everything dumped in because it was desktop to QuickBooks Online. So he was using time slips.

Yeah.

And he— but he just insisted it's a 3-way, it's a 3-way. And, um, we had to end up changing everything the way it was structured because it wasn't structured the way it should have been anyway for us. We— and he had a lot of trust accounts, so we— it was really tangly and messy, which can all lead into the conversation about whether or not you should use a sub-liability or use the customer method, which is Another topic in the Law Lab, because some people believe that no, you don't need to— why do all that if you're using Clio? You don't need to do that. But if you have a lot of them, let me tell you, you need to do that.

You do need to do it. Yeah.

You might be able to get away with it, or a firm that doesn't have a lot of trust. But if you have a firm that has a lot of trust, you need to have that view of all the liabilities. Because you know what, if you get audited, you know how easy it is to pull those records down for the auditor? in the method that they want to see with the register of the ins and outs of the money. If you're doing the customer method, it can get really messy, and, and it's hard to be able to pull that out in the way that the, the bar wants to see it.

And you know what I'm thinking of, uh, Stephen? Uh, sorry to cut you short, but in thinking of this analogy of just using, using that customer method, that's taking a chance on the fact that you've set it up as customer and subcustomer. Because it matters.

Right.

Some people don't even do that. They just lump it in as one customer.

Yes.

And we find, as I'm doing one right now and rechecking work from staff, what happened between the client level and the matter level? Because clients could pay into a matter. Sometimes clients, depending on your software, could pay into a client level in the same bank account. But how does it get recorded and delineated? Because it'll show incorrectly if they're using a practice management software. They don't know where the money is technically. So that's what I was thinking of, Linda, is like, that could be another throws to why it would be so complicated to do it that way.

Yeah.

Well, you know, the trust accounting can go south so easily.

Oh God.

I think that sometimes the overkill, what the attorney might see as overkill when we're telling them you need on your balance sheet, you need the master liability account with all the subaccounts underneath. It might seem like overkill to them, but I always respond with, you want overkill here. You want it, you want it to go deep here. You want to have that workflow touch all of these places and balance in the end.

Absolutely.

Yeah. You just want clarity. You want, you want to be completely transparent. So if you have to Explain some piece of it. It's just if you can keep it neat and orderly all the way through, you're going to be really happy with your record keeping, I think.

Well, actually, Linda, in recollection of that particular one you were referencing, it was at one point— I forgot which bar, but there was a very specific— most have a specific example, but one specifically, because the information was provided the first time so inaccurately, That particular bar really made us go back and do it exactly the way they wanted it because there was a lot of mistrust. I felt like— am I recalling that correctly? Like we had to actually—

The lady just sent the records out of QuickBooks instead of following their forms, and they don't take too kindly to that. So you really have to present it if the bar asks for it a specific way on a specific form, even if you have to type it onto the form. Do what they ask, do it in time, and just do it properly because that way—

Be nice to the bar.

Yeah, because they don't give you a big window of time either. That's the other thing. So if you're just skating by doing it your method because you think it's easier, you don't feel like taking the time to do all the other meticulous work, you're going to find that if you don't do that and you're stuck with this, they don't give you a big window of time to produce the records, especially if it's something that's not so much random, but it was an actual client that wrote to the bar and said, this is not right, and they turn you in, you don't get a big window of time. And, um, yeah, it really ticked the bar off that they didn't do it properly.

So you were the lucky one. Uh, you got the short straw on that one and had to make that phone call. That was cracking me up. I'm like, how did you do that?

Yeah, I also remember you had to— we had to hop on on a weekend on that one. So, and, you know, yeah, we did. We put in a lot of time and got it done and set up and everything because of the timing. So, yeah.

So when you're doing a 3-way though, to, to the initial conversation we're having, Steve, where you're bringing up that, like, say that off that non-IOLTA bank account, because it could be anything, and there are maybe interest earned on it, and/or it just— it's the way it's handled is not true to the state's requirement.

Well, you know, there's, there's—

What do you do?

There's a reason, and I'm speaking for our state here in Colorado, the Colorado Legal Trust Account Fund. You can go as a new attorney or an existing one to their website and they will have the list of all the banks that they recommend that you work with. They'll let you pick. I'm sure it happens in many states, but they always have the preferred banks listed in there as well. They have a whole section for the preferred banks. And I'll give you an example. We have a client, a newer client that signed up with us in March, and their, their business has just exploded. They've already done over $1 million in revenue since March. And yeah, they're doing really well. And I tried to guide them away from a certain bank that they chose and I said, this bank is not good to work with. It's going to be a problem. They went there anyway, probably because they could get a loan or they liked the teller or whatever the reason was. But now they sent me an email just yesterday and said, we're having trouble, we're trying to find this transaction. And I said, I can't find it for you because your bank search doesn't go back that far. You know, I can't—

I—

you'll have to go through all the bank statements. And, and I said, if you really— you, you need to leave this bank and go to a real bank who cares about handling trust accounts. There's a reason they're on the preferred list. So how do you guys handle that? How do you drive How do you drive your clients to the right bank when that comes along?

Even the right bank is limiting, to your point, is limiting the search capabilities and/or the image availability. And Linda's in a state that is not an optional piece. So we tend to work to the hardest one, which is what Linda in the state of Florida, the way they require, it's front and back, right? Yeah, yeah.

You have to have every copy of everything.

You have to have front, back. Sure.

So all the rules. So I guess it, to your point, Steve, it's, it, I would have like, like you said, you pulled up the BAR stuff and because they do have, there's certain criteria of banks that do a little bit more to it to aid.

Right. They get it.

The BAR. Yeah.

But I don't know, even the ones that I see, I'm like, well, do they do everything that we need? They may not. So it might have to be in a workflow process, whether it be on the firm or on your side, of how to handle that so you don't lose that data. Which I don't know how to answer the question because it's not easy to move a bank.

No, it's not.

You can be in a spot where we've had this happen where a bank got debarred.

A big bank.

And the bar said no. It was a big bank. And so that was a huge shift. But then what do you do with all this uncleared item stuff? So there's like a whole piece to doing this in stages. Plus you have forms of payment coming in, possibly wires, all of this data that could potentially come in. And, you know, you don't want— the last thing you want to do is expose yourself, if you are moving banks, to expose yourself to an NSF moment.

Mm-hmm.

Which then requires the bank automatically to state something, and then it causes a paper—

Causes a flurry of stuff.

Yeah.

Yeah.

So it just becomes this bigger thing. I just— that's a really good question. I think it's a personal case-by-case and relationship. It's your relationship with a client is the way I would see it. How do you feel, Linda? I mean, it's a great question.

Yeah, I think, well, selfishly, I'd like to have— if we had a choice of like, oh, pick Chase, pick Bank of America because the functionality is better. with QuickBooks. But, um, I think, you know, sometimes you get these smaller banks, they're harder. We've got some banks that don't— will not give a client an electronic, uh, way to get online. There's a bank that won't— it's a pretty good-sized bank— won't let you log into the IOLTA online and mails the bank statement. So then the person in the office has to scan it to PDF and upload it to us. It's those all— all those steps just slow the whole process down. So Preferably like to have the bigger banks, but sometimes you work with somebody, say, in Iowa, you don't have the same, you know, what are they allowed to do? I think that what account, what bank account are they with? It's just, I don't think I'd ever ask a client to actually move unless it was a really valid reason to make them move. I don't know.

You know, on the flip side of that, the teeny tiny banks, like we have a teeny tiny bank up in Walden, Colorado. That, that they're the teeny tiny Bank of America. I mean, I— but I'll tell you what, you can get to a live person really easy with the team.

Oh, you have a live person in a bank? Wow.

Yeah, yeah. I mean, they answer the phone and everything, so it's kind of cool.

They make you too, like, even for the— even for a client we had a client recently that was new, just left a big, big law and moved into their own little space, and then they're just starting and they were all excited and how do I do this? And I think, Sarah, you kind of handled this one, but She needed to open up an IOTA account. Where do I go? She had no clue where to go. And we had to go to the bar to see what banks were allowed. And these are your offerings. And this is, this is the experience we've had with whatever bank. And then you can't just walk into the bank and say, I'm here, I just, you know, here's $100, I want to open the IOTA. You have to call. I have to call or online make an appointment to go into the bank. You can't just show up anymore. That, those days are gone.

Oh yeah, those days are gone.

Yeah, they're gone. Yeah. Well, and also the Because I think of the way that trust accounting works. Not every trust account can be opened just here and there. Um, there's like a whole backend now depending on the bank's system. So even the preferred bigger banks, I, I see no problem if you want to bank with a smaller bank for certain reasons.

A lot of them will loan money easier.

Yeah. However, if you are looking through the trust lens, uh, the protection sometimes— this is an old adage— is you have your IOLTA in one bank and then you have your main operating in a totally separate bank.

But then you can't transfer.

You, you could. You can do that. It's just a different way of doing it. Like, you can transfer, um, from bank to external bank. You have to set it up, you have to do it correctly.

Wouldn't there be fees involved?

Protocol. Some do, some do not.

Yeah, yeah.

Depends on the how quick you want the money kind of thing, right? But the, the thing is, is you have to follow the cadence and the rules of which you would as if you were to print a check out. So if you're going to batch transfer something out, what's behind that?

Right.

Because we on the 3-way reconciliation need to ensure that we see it, which kind of goes back to my original question. You have a trust account and then you have a non-trust account, but you're treating it like that. Now you have these 2 accounts. How do you balance that? Because you did it wrong the first time, you're making a correction. No, I get it, but we've got to help you make— fix it. It's tricky.

So while we're on that subject of Of talking to the client about challenges like that.

Yeah.

Let's— and if you're an attorney out there listening to this today, this next piece is really key. And, and correct me if I'm wrong here, you guys, or if you haven't had this experience, but typically when an attorney will approach us, they're, they're embarrassed sometimes because their trust account is out of balance. Maybe they don't tell you everything upfront. And they expect it to be reconciled and done at a very low price within the next 3 weeks. And the reality of it is that this is a big project that may take going back over multi-years.

Yeah.

We don't know until we get into the actual reconciliation of the project. Psychologically, for lack of better words, how do you guys handle that with the client of giving them the reality of this picture? And Sarah, you've got a great smile going on this question because we all run into this.

Happened.

Yeah. Why does she go first on this?

Sarah, you have a big smile because this has happened. I mean, for sure.

It happens a lot.

Well, with a project, I think with any project, any cleanup project, you really have to set the parameters of this is how long. And we're going to run up against this now. And this is being recorded in July, and we're going to run up against the tax deadline, right? Yeah. And that affects, like, whatever money's in there, there's probably money that needs to be transferred. All that affects the numbers. So sometimes they say, well, don't worry about the trust. That's not really that important. It's in their brain. They separate that. They kind of take that on the shelf and stick it over there.

It's unearned income.

Right. But if the money's murked up and messy and the trust doesn't balance, guaranteed there's money sitting in that trust that needs to move over to operating so that you're out of compliance. So that will affect your numbers, albeit it'll be this year, because if you actually move it this year— this question came up recently where there was a mess from last year. And the— and we've told them about it last year, didn't do anything about it. And then this year it's still sitting there because the client's very nervous about moving it. Never moved it. Now he's like, where does that income land? Well, it can't land in last year. You did taxes already in last year.

And you didn't move it over.

So we need to move it over. It'll be this year. And I— and we had to correct the dates on the transactions that came from Clio. But I think with any cleanup type of thing, we have to have a very good conversation about This is what it's going to— this is how long we estimate it to take. We're going to work on it. We have X amount of people working on it. We're going to start the job here. This is our estimated timeline of getting it done. And that's based on you answering the questions that we have along the way.

Bingo.

Because the other piece that usually happens is we get all excited about a cleanup and then we disappear back into the world of working head down, working as an attorney, and then the questions don't get answered. And we're stuck. We're— our hands are tied. We can't even help move, move the job forward if we don't get the responses from the client. And that's typically what would happen. And then we— our timeline's blown out of the water, and then it's our fault because it's not done on time.

It's never— it's not our fault, right? But in the eyes, it appears that way, right?

It looks that way.

The reason why I smile is that there's a lot of intricate pieces to it too, in the In the way that— do you have all the information readily available to us?

You don't know until you get into it.

Well, but my— in our list, if you're not going to give us access to the bank for availability to check things, that's like taking my arm and tying it behind my back and telling me to do these states. That doesn't work. I'm not asking for the full availability of admin access. I don't want that liability. I just want to be able to look at the statements, validate what I see in deposits and expenses or wires, any sort of data. I also— I crack up when you guys were talking about this because 90% of the time you'll see this money will go into operating that's intended for trust, and you're telling me not to look at the trust. But now you're going to pay taxes on money that technically isn't in the correct bucket. So I don't know, did you want me to now tie the other hand behind my back and like validate the information? And it happens, an unintentional moment. You get— I'll just pick on a bank that has the same blue colored cards. Let's say you have a personal card in blue and you have a business card in blue. Could you guys just make them different colors, please? Because I can't tell you how many times somebody used the wrong card. Just inadvertently because it's blue and you don't realize it. So then now you've used a personal card for business expenses, or you've used a business card for personal expenses. We gotta untether that to make sure it's, it's properly allocated. That it's happened naturally, just innocently. You have a bunch of business expenses and you're like, oh shoot, I just looked at my credit card and there's all of this. Not to mention, most of you all are multi-entity. So let's talk about that. Do 2 froms. I spent money in the wrong place. Um, all of these little things. Or, you know, your 401. You do have a 401 offered, but it's unintegrated with your payroll system. So you have the laborious task of, okay, yeah, I'm gonna do it this way. I'm gonna make sure all the employees are accurate in the payroll system. I'm gonna go put this in the other system. I'll just pick on Ubiquiti because it's unintegrated, right? And that's oftentimes what it is. No problem with the platform. It's just, well, you have 7 days to do that. Well, I guess you decide to do all of them in July for the entire year. Be ready to pay penalties and interest on that because that's not the requirement. And oh, we hired somebody new, but we forgot to report that. So now they can't be on the plan. You got to look through this lens of some of it being automated. with a human touch of oversight. This role that we play in moments of cleanup and/or monthly transactions, or both, is so key to the vitality of how this business will grow and run.

Very well put.

To say that a 3-way is, uh, it's just okay, it's just informational— no, we're working to a a third layer of compliance. You have state compliance for taxes. You have really 4. I mean, you have payroll compliance on top of that when you have staff, right? You have all these other entities of different things. And I don't want to go on that soapbox because it drives me crazy sometimes. Then you have, then you have the federal, and you have your own personal on top of that because your business feeds your personal life. And then additionally, you have this, you have the The trusted source of being the advisor, the trusted person for clients' retainers and money and how it's earned to you and how you're going to care for that. All of those are all important. Not one of them is less than. So just help your accounting people out. Give them access to things that are necessary.

Well, and Linda, you always have that one line, follow the money.

Oh, that's Sarah's line.

We've got to be able to— we've got to be able to have access to the bank accounts and read-only access. Yeah, again, to your point, don't tie our arms behind us and then ask us to do the project. We've got to have it because we have to— the bank is the source of truth.

It is.

What happened at the bank has got to happen.

I don't care. That is the way this is to me. This is why that follow the money phrase came up in conversation with Linda and I. I said, well, for God's sakes, Linda, I just follow the dang money.

Where did they go? Make a t-shirt with that. Follow the money. Follow the law.

Oh, we should have that for our podcast uniform.

Yeah. I mean, it's so true, right? It's so true that you— and we've had conversations like, that's not true. No. Like we had it the other day. Somebody transposed the number in Clio. They processed it out of Clio and then went and created a check in QuickBooks, didn't use the little checkbox, wrote their own check and transposed the numbers, and it ended up being $60 more was taken out of this trust account than it should have been. So now they had to go move money out of operating into trust, which I'm sure that conversation went real well with the business owner, with the bookkeeper and the business owner. But that's because she didn't use the little box in Clio that says create the check, which we've told numerous times, use the little box. So they transferred the wrong amount. And that so easily can happen, right? Clio's not connected to the bank in that way that you can't transfer out of the bank account.

I'm giving you the thumbs up.

Yeah. So follow the money. Follow the money. You got to follow what happened at the bank. You can write whatever you want and all the— you can put whatever you want in QuickBooks, whatever you want in Clio. If you didn't, whatever happened in the bank—

Or even in your spreadsheets, Linda. We've seen this in spreadsheets. Oh, the spreadsheets.

Yeah.

Even in spreadsheets. Well, I got all the trust accounts in spreadsheets and the micro registers.

Oh, okay. Yeah.

What happened at the bank, my friend? Your $0.50—

Well, as an example, we have a cleanup, a huge cleanup that we're doing now. Great firm. Nice to work with. Love these guys.

Yeah.

The former partner of the firm was handling the trust accounts. And what we discovered was, as an example, maybe in January he took $300,000 from the bank into the operating account. But they didn't really earn it till October. So, yeah. So we have this big batch that went through and we're like, what is this married to?

Yeah.

You know, I'm sure you've seen that before. And so that's, that's an educational opportunity, I call it, with the client of you can't do that. You can't do that. And so we'll spend months looking for that $300,000 and then all of a sudden there it is or pieces of it. They'll just say, well, we had to take $300,000 to pay our bills. But what they earned that month might have been $100,510.13. And so you can't even match it, you know. And so it's always that follow the money first.

Yeah, yeah. Well, and you brought up something really key is date order. You're telling me— I see this, we see this often, it goes reverse. You're telling me May of last year, it's this money should have been transferred But yet you transferred it 3 months later in August. Okay, fine. But then you do the reverse. You show that you got a retainer in, but then the retainer actually came in the day before, but you're putting it 4 days later, or doing the same thing in the reverse order. And, and those are things that we do well. We're not expecting an attorney firm to keep their eyes on that. That's, that's our role to assist you. It's not to, to say that you make mistakes and, you know, like we're gonna point them out. And that's not the idea here. It's just we're guarding this. We're, we're monitoring this with those eyes.

Well, and here's the thing, attorneys listening out there and, and legal assistants and accountants and all of that, we love AI, right? We, we do. We've embraced it. The 3 of us have embraced it. Works very well. But you're always, I truly believe, always going to need to what you just said to Sarah, the human touch.

Yeah.

On the trust account, it needs that. It needs those sets of eyes on it watching it. Yeah. Because AI is only going to do what AI does with what you do in this scenario.

It's not a— it's not actually, I don't see it And I mean nothing against it. I don't see it suited for this, this safety feature. I mean, my—

We're the safety net.

Yeah. And my stomach would turn at the idea that, you know, I gave you $5,000 as a retainer. My expectation as a customer is that you're guarding my money and rightfully showing me how you've earned it. That's the whole basis to this whole thing. And then how often are you holding? Then you tell me I have money, right?

Right.

Yeah.

So how often do you have to guide the attorney-client back to their letters of agreement or their contract with their clients?

Yeah.

You know, what does your contract say to Sarah, your client? When are you allowed to earn and take money at certain steps? And how is that outlined and how does that protect you?

I love this question because Linda and I will say we're not trying to get in your business to get in your business.

Exactly.

We're just trying to validate what ultimately we're producing final financial reports to, and that 3-way is part of that packet. So what are, what are these so-called milestones or earned income moments, and what are you required to do? Are you required to send out a statement every month? To a client. I mean, what is it that's expected?

Sometimes that's the other thing. I mean, with the 3-way bank reconciliation, but even part of trust compliance, it is that they have to— if even if no money moves from the trust at all, it just sits there like an estate planning attorney that just— if they've— they're holding money, they're obligated to let the client know that it's still there. Beginning balance is this, nothing happened, ending balance. So in some states, that's part of compliance. You really have to know your state compliance.

I mean, that's Big part of it and stay current with it.

Yeah, I think, um, I don't know if it's— don't— I'm not going to be totally accurate on this, but I know in California there's something about the number of days too. You can't pull California funds, you know, if work product produced, or there's got to be dialogue, I believe, or there's, there's something about it. I'd have to go back and read it, but, you know, California has Um, very diligently brought this up and made sure that all money coming into a firm goes through trust, and it's got to be monitored. Because I'm sure there have been reported incidents where, um, oh well, they told me they earned it and I just paid them, and I was thinking it was going to go here. Who knows? I mean, why are rules made? They're made because other people broke them, right? And we want to shame people for all of these, like, oh, I have to work to this compliance level. Well, I'm sorry, they're made because people abuse the system. So let's just honor the system. I'm not trying to be combative in a dialogue with you. I just need to work to what I'm supposed to work to. And yes, we have some responsibility as far as like, if we see something wrong, we, we have to raise our hand and say, this doesn't sit in compliance. Let's have a conversation. So It's all coming from a good place, and it's all—

It is.

From a protective place, because your CLEs, your professional liability is on the line for this. And we don't take that for granted as a, as a group that serves— I mean, all accounting people that serve this line. If you are not proficient in this line of work and you have an attorney client and you're second-guessing yourself on things That would be a good time to reach out and see, you know, the Law Lab is there to help you as far as an accounting professional goes. Or you may want to rethink the engagement of that service because if you're predominantly serving, let's say, e-commerce and you got this one-off, it underserves that one-off. So just, just an FYI. It is. People look at what Linda and I do and you do, Steve, and they go, how do you do that? I don't know. It's just in my brain. It just works for us.

I love trust accounts. I love working on them.

Yeah.

You have to be that type of person, too, that likes to work in this kind of work. I think you don't— I don't think people realize if you're that kind of person, and I met plenty of these, and I haven't even— way back in school, like, oh, can't we just wipe it off? It's only a penny. It's like— and I've seen that come up, like, in Facebook. If there's a penny on your bank reconciliation, what do you do? Well, what we do is we figure out what the penny is.

But yeah, we'll just go, that's penny.

And you can't do that with trust accounting.

You know, our dear friend Nicole Davis, this came up and somebody said that, and I saw her shoot right back. And she's right. I mean, the way she responded, like, absolutely, it is to the penny. We— and I feel like they haunt me, those dang pennies.

The pennies are the worst, right? When you have to tell a client that you have, um, Their trust, they still had a penny. Because how are you going to get— I'm going to have to send a check for a penny. It's going to cost me whatever it costs for a stamp and an envelope and all that. I'm like, sorry.

It is what it is.

That's the problem.

I'll tell you, Sarah, you and I have these conversations from time to time because we both come from the hotel business. And one of my jobs in the 18 years that I worked for Westin Hotels was in the night audit.

Yeah.

And so I would go to work at 11:00 at night and get off at 7:00 in the morning. And that was back in the days when we had the big ledger. And so you would start— yeah, all the buckets. And you would start at the top left of that ledger sheet and work your way across and down to the bottom right. And it had to be zero when you got there. And if it was 7:30 in the morning and the bosses came in and you were off by 2 cents, they would pay you till noon to find those 2 cents.

Mm-hmm.

You know, and that, that was good training, especially when we talk about trust accounting. That penny, to your point, Linda, Has to be given back to the client. Yeah, sometimes if they don't, if they don't cash the check, eventually it'll end up in the state fund.

Yeah, it's not a fun thing to list off and give back. You just almost want to say, here's your penny, just get rid of it.

Oh man, what a, what a good conversation about this. This has been— I'm glad we kind of re-talked about— we talked about a little differently. But I, I feel like it— there's— it's like a— it's like slicing a piece of fruit. There's no right way, wrong way to do it, right or wrong. I'm kind of putting my words together, I guess. But you have— and fundamentally to what you said earlier, Linda, you have to work to a certain level of compliance or cadence fundamentally, so it's easy to grab, easy to showcase. easy to deliver in a report fashion that's understood. And we've just found success in the way that we do it. As monotonous as it can be sometimes.

Mm-hmm.

It's always hard too. People will throw in 2 or 3 different practice managements on top of, you know, because they've migrated over, you have that to balance in one set of books. I mean, there's, there's a lot of complexity to this. Style of working, so AI just can't do that part of it so well.

Yeah, yeah.

But yeah, well, thanks for the great discussion.

Yes.

What are the what are the weekend plans for you both? I'm curious. We all gonna.

It's my dad's birthday party on Saturday, so we're gonna do that.

Oh, oh, I have family coming. We're going to the beach.

Nice.

I didn't remember that.

Hopefully the weather is hot here. It's Going to the beach is like, oh, it's like last night I looked at my phone. I was talking to someone on the phone. I looked at my phone and it said 85, but it was 95. And this is like at night, it's dark. It was 95 degrees and it's really hot here right now. You don't want to—

That's how it was here yesterday. I went to bed at 9 o'clock last night and it was 92 degrees. I'm like, this is just wrong.

Thank God for air conditioning, right? Yeah. Our savior right now.

Yeah. Yeah. We have a, we have a cool, cool-off period right now in the Pacific Northwest because we've been on the news so much. So I'm grateful it's around 70 and it feels good.

Oh, that sounds so nice.

Long sleeves.

You know, Las Vegas, I think it was yesterday or the day before, had a record.

Record, did it? Yeah.

They said people were burning their feet on the sidewalks.

Oh, I believe that.

Oh my God.

Yeah.

And 120-degree or whatever.

I'm like, why do you walk your dog?

Like, why is You have to walk the dog really early and then just take mom.

Do you know what I do? I'm one of those dog lovers that I will stop somebody on the street and say, you are burning your dog. Can you tell? Look at how miserable your dog is. And your dog is devoted.

Yeah.

And when they're devoted to the owner, they're going to do whatever. That's just— you gotta—

oh, it's rough.

Don't do that to your dogs.

Yeah. For us this weekend, my husband is Pretty busy Friday, Saturday, so we'll do a family day on Sunday.

Oh yeah.

So it'll be nice and it'll be nice weather. And my, my niece's birthday is coming up, so I'm actually excited to— she's funny. So I'll see when, when that birthday party is, but it'll be fun to eat happy cake, as she calls it. I love birthday cake. She calls them happy cake, and I think that's the cutest thing. I like happy cake.

That sounds cool.

Yeah, so yeah, that's it.

Right.

I appreciate it.

All right, Tiara.

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Awesome.

Thanks, everybody. We'll see you all next week.

Thank you. Have a good weekend.