A partner opens the reporting accountant's report and turns to the schedule at the back, listing forty three matters that still hold money in client account. The balances run from a few pounds to a few hundred, they add to something over five thousand pounds, and every file was billed and closed months earlier. Those figures are illustrative. What matters about the schedule is not its total but that nobody inside the firm knew it existed until someone outside the firm produced it.
Every balance on a list like that has an ordinary explanation. A completion goes through with a small surplus and the fee earner intends to send it on once the final search fee lands, then the file closes and the intention closes with it. A client sends money on account a week after the matter settled, the cashier banks it promptly as trained, and nobody allocates it against anything. Costs are billed and the transfer to office never happens, so the firm sits on money it has already earned.
The awkward part is that the firm's main financial control looks straight at this and reports nothing wrong. The SRA Accounts Rules require a reconciliation of the client bank statement, the cash book and the client ledger total at least every five weeks, signed off. Forty three dormant balances agree to the penny with the bank, so the reconciliation comes out clean and the signature goes on. It proves the total and tells you nothing about the composition.
Read the ledger against the matter, not against the bank
The rules under strain are different ones. Client money must go back to the client or the third party entitled to it once there is no longer any proper reason to hold it, and a client account must never be used to provide a banking facility. A bill or other written notification of costs has to reach the client before money moves out of client account to pay those costs. Dormant balances engage the first obligation from the day the reason for holding the money runs out, and the longer they sit, the closer they come to the second.
The control that catches them is an exception report, run monthly, derived from the ledger and read against the status of the matter. It lists every matter carrying a client account balance where the last time entry, the last correspondence or the final bill is older than a period the firm sets, ninety days being a defensible start. It picks up every receipt sitting unallocated, and every balance where costs have been billed and the transfer to office was never made. Each exception needs a named owner and a date, and someone senior enough to ask why an item has appeared on the list twice.
The work is derivation rather than inspection. A firm running four hundred live matters can print a client ledger listing and nobody will find anything in it, because no reader holds matter status, last activity date and billing position in mind while scanning columns of plausible balances. The report has to do that joining. Once it does, the list that comes back is normally short enough for one person to clear in an afternoon a month.
Getting the derivation done without a monthly spreadsheet
Firms already hold every input the report needs, split between the case management system and the accounts package, which is where the joining stalls. The Bracton AI Assistant plugs into the case management or CRM system the firm already runs, LEAP, Clio, Proclaim and others, reads every live matter overnight, drafts routine work, flags files that have stopped moving and recovers time that was worked and never recorded. A balance sitting on a matter whose last activity predates the threshold falls out of the same pass. Flags come from deterministic rules rather than model output, derived dates carry the working behind them, and every output goes to a qualified fee earner for sign off. Bracton never contacts a client, it files its work inside the host system. The same overnight pass runs inside Bracton, the case and client management platform, where the ledger and the matter record already sit together.
Test the point this week without buying anything. Ask your cashier for every matter holding client money where nothing has been recorded for six months, and put the oldest three in front of the partner who signs the reconciliation. If you would rather see the exercise run against your own ledger, with each flag showing the working so your cashier can check it before anyone acts, book a client account review.