What is three-way trust reconciliation?
Updated September 28, 2026 · Meridian Command
Three-way trust reconciliation is the regular check that three records of a client trust account agree: the bank statement balance, the balance in the firm’s trust account journal (its checkbook register), and the total of all individual client ledger balances. If any two disagree, something needs to be found and fixed.
The three records
| Record | What it shows | Where it usually lives |
|---|---|---|
| Bank statement | What the bank says is in the trust account, adjusted for outstanding deposits and checks | Your bank |
| Trust account journal | Every deposit and disbursement the firm has recorded for the account | Your accounting ledger |
| Client ledgers | The balance held for each individual client, added together | Your practice management system |
How often should it be done?
The American Bar Association’s Model Rules on Client Trust Account Records call for monthly trial balances and quarterly reconciliations, with records kept for five years after a representation ends. Many states set stricter requirements, including monthly three-way reconciliation. Your state bar’s rules are the ones that apply, so check them directly.
Why variances happen
- A deposit or disbursement recorded in one system but not another
- Transfers from trust to operating recorded late or in the wrong period
- Bank fees or interest posted to the trust account
- A client ledger overdrawn while the account total still looks fine
- Simple data entry errors that compound month over month
Where a dashboard helps, and where it doesn’t
A dashboard can’t do your reconciliation of record, and it isn’t legal or accounting advice. What it can do is compare the three sources continuously and show you a variance as soon as it appears, instead of weeks later at month end. In the Meridian Command demo, practice management shows $36,598 in trust debits while the ledger and bank both show $39,224, a variance of $7,198 that is flagged for review.
Frequently asked questions
Is two-way reconciliation enough?
Matching the bank statement to the journal alone won’t catch a client ledger that is wrong or overdrawn. The third comparison, against the sum of client ledgers, is what protects each client’s money individually.
Who should perform it?
Usually the firm’s bookkeeper or outside accountant, reviewed by a responsible lawyer. The lawyer remains responsible for the account under the rules of professional conduct.
See these numbers in the demo.
The Meridian Command demo shows these numbers for a fictional firm, including a live trust variance.
Try the demo