Direct answer: A three-way trust reconciliation compares the adjusted trust-bank balance, the firm trust journal or ledger, and the total of all individual client ledgers for the same cutoff date. The three independently prepared balances should agree. A match is evidence that the records are internally consistent; it is not, by itself, legal advice, an audit, or a compliance guarantee.
Key takeaways
- Use the same account and cutoff date for all three records.
- Document outstanding checks, deposits in transit, and every adjustment.
- Preserve the source records and the completed reconciliation together.
- An attorney remains responsible for jurisdiction-specific rules and final review.
The three balances
The first balance is the bank statement adjusted for legitimate timing items, such as checks issued before month-end that have not cleared. The second is the ending balance in the firm's trust account journal. The third is the sum of the ending balances in every client or matter ledger tied to that trust account.
These are related records, but they should not be treated as one copied number. The control works because each balance comes from a different view of the same client funds. Agreement helps expose missing entries, duplicate entries, cutoff errors, and money that has not been attributed to a client ledger.
What a proper reconciliation packet should show
A useful packet shows the statement ending balance, additions and deductions used to reach the adjusted bank balance, the trust-journal balance, the client-ledger total, and any unresolved difference. It should identify the account, statement period, preparer, reviewer, source versions, and completion date.
If a number changes after review, the old approval should not silently carry forward. The revised source set should produce a new reconciliation version so the reviewer can see what changed and approve the exact packet in front of them.
Why a zero difference is necessary but not sufficient
Three wrong records can agree. A transferred error, fabricated adjustment, stale client balance, or omitted transaction can still leave the totals equal. That is why the arithmetic control should sit beside source retention, transaction review, negative-balance checks, stale-item review, and explicit supervisory approval.
TriBalance is designed as a reconciliation and evidence workflow. It does not decide whether a transaction is legally permissible, certify compliance, or replace the attorney's professional judgment.
Frequently asked questions
How often should a law firm perform a three-way reconciliation?
Monthly is a widely used control and is required in some jurisdictions, including California. Requirements vary, so confirm the rule that applies to each trust account and jurisdiction.
Is a bank reconciliation the same thing?
No. A bank reconciliation compares bank activity with the firm's book balance. A three-way trust reconciliation also compares the total of the individual client ledgers.
Sources and further reading
This article is operational education, not legal advice. Trust-account rules and retention requirements vary by jurisdiction. Confirm the requirements that apply to your firm and accounts.