What law firms actually need from accounting software
Before you compare tools, understand why law firm accounting is different from regular small business accounting. Your state bar has specific rules about how client funds are handled. Get it wrong and the consequences range from disciplinary action to disbarment.
Trust and IOLTA accounting. This is the non-negotiable. Client retainers and settlement funds sit in trust accounts that are legally separate from your operating account. Your software needs to maintain individual ledgers for each client matter, prevent overdrawing any single client's balance, and generate three-way reconciliation reports (bank statement vs. book balance vs. individual client ledgers). If your tool can't do this natively, you'll spend hours in spreadsheets or risk compliance violations.
Time tracking tied to billing. According to Clio's 2024 Legal Trends Report, the average lawyer bills only 2.9 hours per day. That gap between hours worked and hours billed is partly a time capture problem. Your accounting software (or the practice management tool it connects to) needs to make it easy to log time as you work, not at the end of the day when you've forgotten half of what you did.
2.9 hours per day: the average lawyer's billable output, per Clio's 2024 Legal Trends Report. Better time capture tools increase revenue without adding clients.
Conflict checks. Not strictly an accounting feature, but any practice management tool with accounting built in should include conflict checking. Before you open a new matter, you need to search existing clients and opposing parties. This matters for billing because taking on a conflicted matter means writing off all the time you've already logged on it.
Retainer management. Tracking retainer balances, sending replenishment requests when balances drop below a threshold, and applying retainer funds to invoices should be automated. Doing this manually across 50+ active matters is where mistakes happen.
Integration with case management. If your accounting tool and your case management tool don't talk to each other, you're entering data twice. Time entries, client contacts, matter details, and invoice status should sync without manual effort.
The biggest decision isn't which accounting tool to pick. It's whether you want accounting built into your practice management platform (Clio, CosmoLex, LEAP) or a standalone accounting tool paired with separate legal software (QuickBooks + Clio, Xero + PracticePanther).
The 5 tools worth evaluating
Three of these are legal practice management platforms with accounting built in. Two are general accounting tools that law firms commonly pair with legal-specific software.
| Feature | Clio | QuickBooks | CosmoLex | LEAP | Xero |
|---|---|---|---|---|---|
| Starting price | $49/mo per user | $35/mo | $99/mo per user | $99/mo per user | $29/mo |
| Trust accounting | Built-in | Manual setup | Built-in | Built-in | Manual setup |
| Time tracking | Built-in | No | Built-in | Built-in | No |
| Billing | Legal billing | General invoicing | Legal billing | Legal billing | General invoicing |
| Case management | Yes | No | Yes | Yes | No |
| QuickBooks integration | Yes | N/A | Not needed (replaces QB) | Yes | N/A |
| Best for | Small/mid firms | Firms with a bookkeeper | Solo attorneys | Mid-size firms | Budget-conscious solos |
Clio Manage
Pricing: $49-$149/mo per user (EasyStart, Essentials, Advanced)
Clio is the most widely used practice management platform for law firms. It handles case management, time tracking, trust accounting, billing, client intake, and document management in one place. The trust accounting module maintains per-matter ledgers and generates three-way reconciliation reports that satisfy bar requirements.
Most firms that use Clio still connect it to QuickBooks or Xero for general bookkeeping (expense categorization, bank reconciliation, tax prep). Clio handles the legal-specific financial side well, but it's not a full general ledger system. The two-way sync with QuickBooks is reliable and keeps invoices and payments in sync without double entry.
What it does well:
- Trust accounting with per-matter ledgers and three-way reconciliation
- Time tracking with timers, activity descriptions, and batch billing
- Client portal for sharing invoices, documents, and secure messages
- 200+ integrations including QuickBooks, Xero, LawPay, and most court filing systems
- Mobile app that's actually usable for logging time on the go
Where it falls short:
- Not a full accounting system. You'll still need QuickBooks or Xero for general bookkeeping.
- Per-user pricing adds up fast for firms with 5+ attorneys
- Advanced features (custom fields, workflow automations) are only on the $149/mo tier
Read the full breakdown: Clio vs MyCase
QuickBooks Online
Pricing: $35-$235/mo (Simple Start to Advanced)
QuickBooks is the default accounting software for small businesses, and plenty of law firms use it. The general accounting is solid: bank feeds, expense categorization, invoicing, P&L reports, tax prep. Your accountant almost certainly knows it.
The problem is that QuickBooks has no built-in trust accounting, no time tracking for legal billing, and no case management. You can set up trust accounting manually using sub-accounts and classes, but it's fragile. One wrong journal entry and your client ledgers are off. Most firms that use QuickBooks pair it with Clio, PracticePanther, or Rocket Matter for the legal-specific workflows and let the integration sync data between them.
What it does well:
- Bank feeds and automatic transaction categorization
- Strong reporting: P&L, balance sheet, cash flow, custom reports
- Every accountant and bookkeeper knows how to use it
- Integrates with almost everything, including Clio's two-way sync
- Payroll add-on for firms with staff
Where it falls short:
- No trust accounting. Manual setup is possible but risky for compliance.
- No time tracking, billing, or case management. You need a separate legal tool.
- Total cost increases when you add the legal practice management tool on top
Read the full breakdown: QuickBooks vs FreshBooks
CosmoLex
Pricing: $99/mo per user (includes all features)
CosmoLex is the only platform on this list that combines full legal accounting (including trust accounting) with practice management and doesn't require a separate QuickBooks subscription. For a solo attorney, that's the pitch: one login and one bill that covers trust ledgers, time tracking, billing, general bookkeeping, bank reconciliation, and case management.
The trust accounting is where CosmoLex earns its price. It prevents you from disbursing more than a client's available trust balance, generates three-way reconciliation reports automatically, and maintains an audit trail for every trust transaction. Compare that to manually configuring sub-accounts in QuickBooks and hoping nobody makes a journal entry mistake.
What it does well:
- True all-in-one: trust accounting + general accounting + practice management
- No need for QuickBooks or Xero as a separate tool
- Built-in safeguards prevent trust account overdrafts per matter
- Automatic three-way reconciliation reports
- Flat pricing with no feature tiers to navigate
Where it falls short:
- The interface feels dated compared to Clio. Usable, but not polished.
- Document management is basic. You may still want a separate DMS.
- Fewer integrations than Clio. If your workflow depends on third-party tools, check compatibility first.
- Reporting is adequate but not as flexible as QuickBooks for custom financial reports
LEAP
Pricing: $99/mo per user (pricing may vary; contact for quote on 5+ users)
LEAP targets firms in the 3-30 attorney range. It's a practice management platform with legal accounting built in: matter management, time tracking, trust accounting, billing, document automation. The accounting module handles both trust and operating accounts, with bank reconciliation and financial reporting included.
The thing that sets LEAP apart is document automation. It ships with a library of legal forms and precedent documents that auto-populate with matter data. If your firm churns out real estate closings, estate plans, or immigration filings, the template library alone is worth the subscription.
What it does well:
- Practice management + accounting in one platform, similar to CosmoLex
- Document automation with a large template library
- Trust accounting with per-matter ledgers and reconciliation
- QuickBooks and Xero integration if you still want external accounting
- Office 365 integration for email and calendar sync
Where it falls short:
- Less name recognition than Clio, so fewer third-party integrations
- The client portal is not as polished as Clio's
- Onboarding takes longer than Clio or CosmoLex due to document automation setup
- Pricing is less transparent for larger firms
Xero
Pricing: $29-$78/mo (Starter, Standard, Premium)
Xero is a general accounting tool, like QuickBooks, but cheaper at the low end and popular with firms that have accountants who prefer it (common in the UK, Australia, and New Zealand, growing in the US). It handles bank feeds, invoicing, expense tracking, payroll integration, and financial reporting.
Like QuickBooks, Xero has no built-in trust accounting, time tracking, or case management. You'll pair it with Clio, PracticePanther, or another legal practice management tool. Clio's Xero integration syncs invoices and payments both ways.
What it does well:
- Cheapest starting price on this list at $29/mo
- Clean interface that's easier to learn than QuickBooks
- Unlimited users on all plans (QuickBooks charges per user at higher tiers)
- Strong bank feed reconciliation
- Good API for custom integrations
Where it falls short:
- No trust accounting, time tracking, or legal-specific features
- Smaller ecosystem of US-based accountants who use it vs. QuickBooks
- Reporting is less detailed than QuickBooks Advanced
- Fewer native integrations with US legal tools compared to QuickBooks
Read the full breakdown: QuickBooks vs Xero
How to decide
This comes down to firm size, tolerance for managing multiple tools, and whether you already have a bookkeeper running your books.
Solo attorney who wants one system: CosmoLex. It handles trust accounting, general accounting, time tracking, and billing without needing QuickBooks. One login, one bill. The interface isn't flashy, but it works.
Small firm (2-10 attorneys) that wants the best practice management: Clio Manage + QuickBooks Online. Clio handles the legal side (trust, time, billing, cases). QuickBooks handles the business accounting. The two-way sync keeps them connected.
Mid-size firm (5-30 attorneys) with heavy document production: LEAP. The document automation library pays for itself if you're producing standardized legal documents at volume. Accounting and trust are built in.
Firm that already uses QuickBooks and just needs legal features on top: Add Clio or PracticePanther. Don't rip out QuickBooks if your bookkeeper lives in it. Layer the legal tools on top and connect them.
Budget-conscious solo or small firm: Xero ($29/mo) + Clio EasyStart ($49/mo per user). This is the cheapest combination that covers both general accounting and legal practice management. Total: $78/mo for one attorney.
Connecting your accounting to your practice management stack
If you run separate tools for accounting and practice management, they need to talk to each other. An invoice created in Clio should show up in QuickBooks automatically. A payment that hits your bank account should update both systems.
Clio and QuickBooks have a native two-way sync that handles invoices, payments, and client contacts. For firms using tools that don't have a native integration, n8n, Make, or Zapier can bridge the gap.
Common automations we build for law firms:
- New client intake to accounting: Client signs an engagement letter in Clio. Contact and matter details automatically create a customer record and project in QuickBooks.
- Trust deposit notifications: When a retainer payment is received, the attorney and client both get a confirmation email with the updated trust balance.
- Retainer replenishment: When a client's trust balance drops below a threshold you set, an automated email asks the client to replenish. No one has to remember to check balances manually.
- Monthly trust reconciliation reminders: Automated task creation on the first of each month with a checklist for three-way reconciliation, linked to the relevant reports.
- Invoice follow-up sequences: Unpaid invoice at 30 days triggers a reminder email. At 45 days, a second reminder. At 60 days, a task is created for the attorney to follow up directly.
Using Clio and QuickBooks but syncing data manually? We'll audit your current workflow and show you exactly what to automate first.
Get a Free Automation Audit →Clio vs MyCase — head-to-head comparison of the two most popular legal practice management platforms.
QuickBooks vs FreshBooks — comparing general accounting options for small businesses.
QuickBooks vs Xero — if you're choosing between the two main general accounting platforms.
Not sure which accounting setup fits your firm?
We work with law firms to connect their practice management, accounting, and client intake tools. We'll look at what you're using now and tell you what to automate first.
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