Migrating practice management system: NZ trust accounting

When a NZ law firm migrates from a legacy PMS like Affinity or Infinitylaw to a cloud system, they need to ensure the new system handles NZ trust accounting the way their TAS supervisor expects. If it does not, this can create years of friction and frustration.

This guide covers the trust accounting considerations that should drive your PMS migration decision: what the NZ regulatory framework requires, where cloud systems tend to fall short, and what to test in a vendor demo before you sign.

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Why trust accounting must lead the migration decision

When evaluating cloud PMS options, it is tempting to compare features: document management, matter templates, billing workflows, Microsoft 365 integration. Most modern cloud systems handle all of these adequately. They are not the differentiating factor.

What separates systems for NZ law firms is trust accounting. NZ solicitors operate under specific regulatory requirements that not all cloud PMS vendors support natively. Choosing a system that handles billing well but requires workarounds for the monthly TAS reconciliation means the firm's trust accountant absorbs that cost every single month. That is the risk worth evaluating carefully before committing to a system.

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The NZ trust accounting framework

NZ solicitors operating trust accounts work under:

• Lawyers and Conveyancers Act 2006, ss110 to 116
• Lawyers and Conveyancers Act (Trust Account) Regulations 2008
• Lawyers Trust Accounting Guidelines (LTAG), June 2024

The requirements most relevant to your PMS choice:

• Monthly TAS certificate: Filed by the 10th working day of the following month under s115 and Reg 17
• Three-way reconciliation: Bank statement, trust cash book, and client matter ledger totals must reconcile monthly
• IBD handling: Under s114, client funds must earn interest where practicable; your PMS needs to support the AEOI/CRS and FATCA implications
• NZLS Inspectorate readiness: Inspections are submitted via Audit Assistant; your PMS should produce the expected reports without manual reformatting

These requirements are the same regardless of which system you choose. What differs is how naturally they sit inside a given product, and whether your trust accountant needs workarounds to complete their standard workflows.

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Built for NZ vs adapted for NZ

The most useful question when evaluating any replacement PMS: was NZ trust accounting designed in, or bolted on?

Most cloud PMS systems use Xero or a similar tool for the firm's general ledger, covering accounts receivable, billing, and profit and loss. That part is consistent across most options and is not the distinguishing factor.

What differs is how the trust accounting module was originally designed. Some cloud systems were built from the ground up in the NZ market, with NZ regulatory workflows as a first-class requirement. Others were built for Australian legal practice and adapted for NZ. For core trust functions the adaptation may work adequately; the question is how well NZ-specific workflows, such as IBD under s114, the TAS certificate format, and NZLS inspection reporting, are handled natively rather than through workarounds.

A smaller firm with straightforward trust workflows may find an adapted system works without friction. A firm with complex IBD management, high-volume trust movements, or a TAS supervisor with strong views on reconciliation tooling will typically find the design-origin difference more meaningful.

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The three-way reconciliation problem

This deserves its own section because it is where legacy-to-cloud migrations most often go wrong.

Three-way reconciliation is not a simple report. It requires your PMS to hold all three legs cleanly: the bank statement balance, the trust cash book, and the total of all client matter ledger balances, and to surface any discrepancy in a way the TAS can trace and resolve without leaving the product.

Legacy systems that were built for NZ often handle this well, because it was a design requirement from the start. Cloud systems that were adapted from Australian regulatory requirements sometimes handle it less cleanly, requiring the TAS to cross-reference data across multiple screens or export figures to reconcile externally.

When evaluating a replacement system, ask specifically how the reconciliation workflow runs in practice. Not whether the system supports reconciliation. How it works: where each of the three legs lives, how discrepancies are surfaced, and whether you can trace and resolve them without leaving the product. Ask your prospective vendor to run through a real reconciliation workflow in a demo, not a slides-based overview.

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What to ask vendors before you commit

When evaluating cloud PMS options to replace a legacy system, the questions that matter most are rarely the ones that come up in a standard vendor demo. Vendor demos are sales exercises. Push beyond them.

Monthly reconciliation: Ask the vendor to demonstrate a three-way reconciliation in a NZ trust account context. Where are the bank statement, trust cash book, and client ledger totals? What happens if they do not agree? Can your TAS trace the discrepancy without leaving the product?

TAS certificate: Can the system generate the s115 / Reg 17 certificate directly, or does your TAS re-key data into a separate form each month?

IBD tracking: Can the system track client funds in IBD accounts separately from the general trust account, allocate interest per client, and produce the required IBD statement?

Inspection readiness: Can it produce client ledger balances, transaction listings, and reconciliation summaries in a format NZLS inspectors expect, without manual exports or reformatting?

Audit trail: Is there a complete, tamper-evident record of all trust transactions, including who entered what and whether anything was subsequently edited?

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Getting independent advice

Valley IT works with NZ law firms migrating from legacy practice management systems to modern cloud alternatives. We are vendor-neutral, with no referral fees or commercial relationships with any PMS vendor.

If your firm is on Affinity, Infinitylaw, or another legacy system and you are evaluating your options, book a free consultation. We can help you structure the evaluation and ask the right questions in vendor demos.