From medieval England to modern-day Australia, Trust Accounting is an essential and highly- specialised field.
The Trust Accounting specialty has been around for a long time – it was formalised as an official accounting practice in Medieval England. In the centuries since, Trust Accounting rapidly became more complicated and regulated as global economies grew and more sophisticated financial instruments were developed.
Today, Trust Accounting is an essential part of the legal, finance, and real estate industries. Its purpose remains the same – to protect the interests of clients and other stakeholders by ensuring that the funds entrusted to professionals are managed and used appropriately.
It is a highly specialised area of accounting that requires expertise, sharp attention to detail, and adherence to strict ethical and legal standards. Failure to comply with these standards can incur financial penalties, so it is an important area for Law Firm Directors to pay close attention to.
Trust Accounting is a highly specialised area of accounting in law firms, and those skills can be hard to find in the legal job market.
Bev McSween is Head of Trust Accounting at LexVeritas and has over 30 years of experience in accounting in the legal industry. Bev supervises the Trust Accounts of law firm clients and is responsible for the day-to-day operations of their accounts. She also oversees continual training of LexVeritas Trust Accounting staff to understand legislation and the guidelines from Law Societies and how these are implemented into everyday practice.
“Historically, I have found that law firms are understaffed in their accounting areas in general. And Trust Accounting has always been the least staffed area,” Bev said.
Bev explains that there are nuances and complexities to the Trust Accounting process that may not be obvious to more general accounting professionals.
“My team and I ask the right questions and provide tangible advice to our clients. The consequences of mismanagement in their Trust Accounting can have serious consequences for both the firm and their clients, and we make sure all the checks and balances, assessments, and procedures are performed before any funds are moved.”
Failure to manage Trust Accounts correctly creates significant implications for law firm Directors and potentially their clients too.
One of Bev’s core focuses at LexVeritas is continually upskilling her team. Mistakes can occur in any business, but when it comes to dealing with Trust money, one tiny mistake can cause serious consequences for law firms.
Ultimately the Directors of the law firm are responsible for any errors with their Trust Accounts, and independent audits occur every year as well as investigations by Law Societies. The consequences of minor breaches can include penalties, including fines. Major breaches could end in disbarment and even criminal charges.
“At LexVeritas, we analyse transactions against the legislation to ensure we deal with the funds in an appropriate manner and that nothing is missing. We have specific procedures we developed to do this for our clients,” Bev explained.
“Everything must be recorded in a set way that meets Law Society requirements, and I liaise closely with our clients to make sure they are fully compliant.”
If something is incorrect, the Law Society must be notified, in what is called an ‘irregularity notification.’
Minor errors are generally accepted if the notification process is done correctly, all information is provided, and records are accurately kept according to best practices.
Digital transformation in Trust Accounting is key to greater efficiencies for law firms and their clients.
Trust Accounting involves the movement of large sums of money. Some are once-in-a-lifetime transactions for that individual client, and their law firm has a duty of care to make sure the money is dealt with professionally and safeguarded.
Digital transformation has been traditionally slow in this area of specialty but has huge potential to increase efficiencies as it moves into a digital era. Law firms’ clients expect the Trust Accounting process to be fast and efficient. Moving away from paper cheques is supporting this shift.
Government agencies are now accepting electronic payments and property transactions have moved to e-settlements. The move towards a digital Trust Accounting process also supports auditing and compliance, with more easily searchable record keeping, which will need to be submitted quickly in the event of an audit.
Another part of Bev’s role at LexVeritas is to educate the solicitors and their teams about Trust Accounting best practices.
‘LexTrust’ Trust Accounting Service offers efficient and highly skilled management of your firm’s trust accounts.
There is great operational risk in expecting unqualified staff to manage your firm’s Trust Account.
LexTrust is a Trust Account bookkeeping service designed exclusively for law firms as a cost-effective alternative to the traditional in-house model. Our expert team led by Bev McSween assists your firm, delivering a secure and reliable trust accounting service with strict adherence to all legislative requirements. The team is specialists in this niche field and guarantees reliable support and expertise to ensure your firm is compliant.
LexVeritas has the tools, technology, and expertise to run your firm’s daily Trust Account operations. We ensure that you have access to our specialist trust accounting professionals, every business day of the year, providing continuity of your Trust Account operations and reducing operational risk to your firm.
Contact us today to discuss how we can help manage your firm’s Trust Accounting.