When an attorney starts a solo practice, the books are simple: one operating account, one IOLTA account, a few expenses. Then the firm grows. An associate joins, then another. A paralegal, a second practice area, maybe a second office in Quincy or Plymouth. Somewhere along the way, the books that worked for one lawyer stop answering the questions a firm of six needs answered.
Larsen Bookkeeping has worked with Massachusetts law firms for 12 years, especially firms of two to six lawyers. Here is what changes as a firm grows, and how to keep the books ahead of it.
The question every growing firm asks about software
Search for law firm accounting and the first thing you will find is a long list of specialized software. For a solo or small firm, the more important question is not which program, but how it is set up.
We keep law firm books in QuickBooks Online. Set up properly, it handles the operating books, tracks client cost reimbursements separately from fees, and produces the reports a small firm needs. Trust accounting is reconciled three ways every month, against the bank statement, the register, and every client matter ledger.
Whatever software your firm uses for billing and matters, the bookkeeping question is the same: are the books set up to answer the questions you actually ask?
What changes as the firm grows
One lawyer: “Are we making money?”
The profit and loss answers it. The essentials are clean operating books, a reconciled IOLTA account, and fees and cost reimbursements kept apart.
Two or three lawyers: “Who is bringing in what?”
Now the partners want to see billings by associate. That means income needs to be recorded in a way that can be reported by lawyer, from the start, not reconstructed at year-end.
Four to six lawyers: “Which practice areas carry the firm?”
Income by legal service line becomes important: how much comes from estate planning versus real estate closings versus litigation. Combined with operating expenses, it shows where the firm is growing and where it is stretched.
Throughout: “Is the trust account right?”
More lawyers means more client matters, more deposits, and more disbursements running through IOLTA. The monthly three-way reconciliation matters more as the firm grows, not less.
Reports built for a firm, not a generic business
For our law firm clients, we set up reporting around the questions the firm asks. Depending on your records, that can include:
- Billings by associate.
- Income by legal service line.
- Operating income and expenses, compared month to month.
- Monthly IOLTA reconciliation reports.
You receive the same tailored reports every month, so you can see how things change. Then we walk through them with you in a monthly review conversation.
Signs the books have not kept up
0 of 5 apply to you
Working alongside your team
Some growing firms already have an in-house bookkeeper for day-to-day entries. They bring us in for the specialized pieces: the monthly three-way reconciliation, QuickBooks set up to produce the reports they want, and a second set of eyes on the books. If your firm does not have a bookkeeper, we handle all of it.
How getting started works
Firms come to us at different points: books in good order, books no one is sure about, or a problem that needs untangling. Each starts with a conversation about the firm and its books. If cleanup is needed, it is scoped separately with an estimate. Monthly work is a flat monthly fee.
Frequently asked questions
We keep law firm books in QuickBooks Online. If your firm is on something else, we can talk through what a migration would involve.
No. Billing and collections stay with the firm. We keep the books and reconcile the trust account.
Our law firm work is in Massachusetts only.
Talk it through
If your Massachusetts firm has grown past the books it started with, request a consultation. Talk through your concerns, your current books, and what support would fit your firm. Or call 781-924-1489.
This article is general education, not legal advice.