What Software Is Best for Law Firm Accounting

At Towerstone Accountants we provide specialist accountancy services for solicitors and law firms operating under SRA regulation. This article has been written to explain What software is best for law firm accounting in clear practical terms so you understand how the rules apply in day to day practice. Our aim is to help you stay compliant protect client money and make informed financial decisions.

Choosing the right accounting software for a law firm is one of the most important operational decisions a solicitor can make. I say that without exaggeration. The software you choose underpins how client money is protected, how compliance is demonstrated, how cash flow is managed, and ultimately how confident you feel about the financial health of your practice.

Law firm accounting is not simply business accounting with a legal label attached. Solicitors operate in a regulated environment, deal with money that does not belong to them, and are expected to evidence compliance at all times. The wrong software can quietly create risk. The right software can reduce stress, save time, and support better decision making across the firm.

In this article, I will explain in depth what makes accounting software suitable for law firms, the main types of software used in the UK legal sector, the strengths and weaknesses of the leading options, and how to choose the best solution for your firm. This is written from a UK perspective, grounded in how solicitor firms actually operate, and informed by regulatory expectations rather than marketing claims.

Why law firm accounting software is different

The fundamental reason law firms need different accounting software from general businesses comes down to client money.

In most businesses, money received belongs to the business. In a solicitor firm, a significant proportion of the money passing through the bank does not. Client funds are held on trust, sometimes for long periods, and must be accounted for separately and precisely.

On top of that, law firms are regulated by the Solicitors Regulation Authority, which expects firms to be able to demonstrate compliance with the Accounts Rules at any time. That expectation shapes what accounting software must be able to do.

At a minimum, suitable software for law firms must support:

• A clear separation between client money and office money

• Individual client or matter balances

• Robust client account and office account reconciliations

• Accurate audit trails showing who did what and when

• Reporting that supports SRA compliance and accountants’ reports

Many general accounting systems were never designed with these requirements in mind. They can sometimes be adapted, but adaptation brings risk if it is not done carefully.

What a law firm should expect from good accounting software

Before looking at specific products, it is worth being clear about what good looks like.

In my experience, law firm accounting software should help you do the following reliably and consistently.

First, it should make it difficult to do the wrong thing. For example, it should prevent accidental mixing of client and office money or flag unusual transactions.

Second, it should support compliance rather than relying on memory or manual checks. Regular reconciliations, clear client balances, and accessible reports are essential.

Third, it should integrate sensibly with how the firm actually works, including billing, time recording, and case management.

Finally, it should provide useful information, not just data. Partners need to understand lock up, cash flow, and performance without digging through spreadsheets.

The main categories of law firm accounting software

In the UK, law firms generally use one of three approaches to accounting software.

These are:

• Legal sector specific accounting systems

• General business accounting software with legal integrations

• Full practice management systems with built in accounting

Each approach has advantages and disadvantages, and the best option depends on the size of the firm, its complexity, and how integrated the partners want their systems to be.

Legal sector specific accounting systems

Legal sector specific accounting systems are designed from the outset for solicitor firms. They understand client money, trust accounting, and regulatory reporting as standard features rather than add ons.

These systems are often the safest choice from a compliance perspective, particularly for firms that hold client money regularly.

IRIS Elements Accounts

IRIS is one of the most established providers of legal accounting software in the UK.

IRIS Elements Accounts is designed specifically for law firms and is commonly used by small to medium sized practices.

Its key strengths include:

• Strong separation of client and office accounts

• Detailed client ledger reporting

• Robust reconciliation tools

• Familiarity among reporting accountants and regulators

• Integration with other IRIS legal and compliance products

From a practical perspective, IRIS is rarely questioned by the SRA or reporting accountants. It is a known quantity.

The main drawbacks tend to be cost and complexity. IRIS can be more expensive than general accounting software, and it requires proper setup and training to be used well. For firms without dedicated finance staff, this can feel heavy, but the trade off is regulatory confidence.

LEAP Accounting

LEAP is best known as a cloud based practice management system, but it includes a built in accounting module that many smaller firms find attractive.

LEAP Accounting works particularly well when combined with LEAP’s case management and billing tools, creating a single integrated system.

Its strengths include:

• Full integration with case management and billing

• Real time visibility of client and office balances

• Automation of accounting entries from legal work

• Cloud based access with regular updates

LEAP is often well suited to sole practitioners and small firms that want simplicity and do not want to manage multiple systems.

The limitation is flexibility. Firms with complex accounting needs, unusual structures, or bespoke reporting requirements may find LEAP more restrictive than standalone accounting packages.

Tabs3 and PracticeMaster

Tabs3, often used alongside PracticeMaster, is a long established legal accounting system that is particularly popular with firms that have more complex structures or multi office setups.

Its strengths include:

• Mature, well tested accounting controls

• Strong client ledger functionality

• Detailed reporting options

• Suitability for larger or more complex practices

Tabs3 is not the most modern looking system, and some users find it less intuitive than newer cloud platforms. However, it is robust and trusted, which still matters greatly in a regulated environment.

General business accounting software with legal integrations

Some law firms use mainstream accounting software, particularly for office accounting, combined with specialist legal systems for client accounting.

This approach can work well if it is set up properly, but it relies more heavily on process discipline and good integration.

Xero

Xero is one of the most widely used cloud accounting platforms in the UK.

Its strengths are clear:

• Easy to use interface

• Excellent bank feeds and automation

• Strong reporting and cash flow tools

• Large ecosystem of integrations

• Competitive pricing

Many law firms use Xero for their office account, especially where partners are already familiar with it from other businesses.

However, Xero on its own is not designed for client money accounting. It does not natively support individual client balances in a way that satisfies SRA expectations.

As a result, firms using Xero usually pair it with:

• A legal case management system that handles client ledgers

• Clear internal controls around transfers and reconciliations

Used carefully, this approach can work. Used casually, it can create compliance risk.

QuickBooks Online

QuickBooks Online is similar to Xero in many respects and is popular with small businesses.

Its strengths include:

• Straightforward invoicing

• Clear reporting

• Affordable entry level pricing

However, like Xero, QuickBooks is not built for legal client accounting. It is generally best suited to office accounting only.

In my experience, QuickBooks is less commonly used by solicitor firms than Xero, largely because the ecosystem of legal integrations is smaller.

Sage Business Cloud

Sage has a long history in UK accounting and remains widely used.

Sage Business Cloud offers solid accounting functionality and is familiar to many bookkeepers and accountants.

Its strengths include:

• Reliable core accounting

• Good compliance features for tax and VAT

• Established support infrastructure

Its weaknesses in the legal context are similar to other general systems. Client money accounting requires workarounds or integration with specialist software, and the user experience is not as modern as some competitors.

Full practice management systems with built in accounting

Some law firms prefer an all in one approach, where case management, billing, and accounting all sit within a single system.

This can significantly reduce duplication and errors, but it requires commitment to a particular platform.

Actionstep

Actionstep is a cloud based practice management system that includes accounting functionality.

It is popular with firms that want to manage the entire client lifecycle in one place, from initial enquiry through to billing and financial reporting.

Key strengths include:

• Integrated case management and accounting

• Strong workflow automation

• Good visibility of financial performance

• Cloud based flexibility

Actionstep is particularly useful for firms that want structured processes and are prepared to invest time in setup and training.

The learning curve can be steep, and smaller firms may find it more than they need.

Osprey

Osprey is another UK focused practice management platform with built in accounting.

It is designed specifically for legal practices and aligns closely with UK regulatory requirements.

Its strengths include:

• Clear separation of client and office money

• Compliance focused design

• Integration across legal and financial workflows

Osprey is often chosen by firms that want a comprehensive system and are willing to invest in implementation.

Comparing the options in practical terms

When comparing these approaches, I encourage firms to think in terms of risk, efficiency, and scalability rather than features alone.

Legal specific accounting systems tend to score highest on compliance confidence.

General accounting systems score well on ease of use and cost but require careful integration.

Practice management systems score well on efficiency and data consistency but require cultural buy in and training.

There is no universally best option. The best software is the one that fits how your firm actually operates.

Key factors to consider when choosing software

In my experience, the following factors matter most when making a decision.

Firm size and complexity

A sole practitioner with occasional client money has very different needs from a multi partner firm handling large conveyancing volumes.

Smaller firms often prioritise simplicity and cost.

Larger firms prioritise control, reporting, and scalability.

Client money risk

If your firm regularly holds significant client balances, specialist legal accounting software is usually the safest option.

If client money is rare or tightly controlled through another system, a hybrid approach may be acceptable.

Existing systems

If you already use a case management system, choosing accounting software that integrates well with it can save time and reduce errors.

Internal expertise

Firms with experienced finance staff can manage more complex systems. Firms without in house expertise often benefit from software that enforces good practice by design.

Implementation matters as much as the software

Even the best software will fail if it is poorly implemented.

Common implementation mistakes include:

• Inadequate setup of client and office ledgers

• Insufficient training

• Poor data migration

• Lack of documented processes

I always advise firms to treat implementation as a project, not an afterthought.

This often means:

• Involving the COFA early

• Getting accountant input during setup

• Testing reconciliations before going live

• Running systems in parallel during transition

Common pitfalls I see in practice

There are a few recurring issues I see when firms choose accounting software.

One is choosing general business software because it is cheap or familiar, without understanding the compliance implications.

Another is over investing in complex systems that the firm does not have the capacity to use properly.

A third is assuming software will fix process problems on its own. Software supports good processes, it does not replace them.

My professional view

In my opinion, the safest starting point for most solicitor firms is legal sector specific accounting software or an integrated practice management system designed for solicitors.

General accounting software can work, but only where firms understand its limitations and put strong controls around it.

The cost of specialist software is often small compared to the cost of fixing compliance failures later.

Final thoughts

There is no single answer to the question of what software is best for law firm accounting.

The best software is the one that:

• Protects client money

• Supports compliance with confidence

• Fits how your firm works

• Provides clear, useful financial information

For many firms, that will mean choosing software designed specifically for the legal sector. For others, a carefully integrated hybrid approach may be appropriate.

What matters most is not the brand name, but whether the system helps you meet your regulatory obligations and run your firm with clarity rather than uncertainty.

You may also find our guidance on How can an accountant help solicitors transition to digital accounting and How do accountants support solicitors with business planning and growth useful when reviewing related SRA and accounting obligations. For a broader overview of solicitor accounting and compliance topics you can visit our solicitors accounts rules hub which brings all related guidance together.