One-way or two-way sync? Connecting your legal system to Xero
More firms are running client account in their legal system and office accounts in Xero, gaining payroll, bill capture, bank feeds and a large app ecosystem. It works well when the link between the two is designed deliberately. When it is left to defaults, month end becomes a reconciliation exercise.
One-way or two-way?
In a one-way design, the legal system posts to Xero: bills, VAT, disbursements and office receipts flow out, and Xero is never edited for those items. It is simpler and easier to reconcile, but anything changed in Xero, such as a voided invoice, does not flow back. In a two-way design, changes flow both ways. It is more flexible, but conflicts, duplicate contacts and payments applied twice become possible, and someone has to decide which system wins.
Who owns each kind of data?
- Contacts: clients in the legal system, suppliers in Xero, or both? Duplicates are the most common problem.
- Chart of accounts and VAT rates: mapped once, carefully, and changed only in a controlled way.
- Departments and cost centres: usually tracking categories in Xero; they must match the legal system's structure or reporting will not line up.
- Invoice numbers: generated in one place only.
Client account stays in the legal system
Client money, client ledgers and the five-weekly three-way reconciliation belong in a legal accounts system built for the SRA Accounts Rules. The integration should make the boundary clear, so no client money transaction is ever posted in Xero.
Timing, volume and limits
Postings can be immediate or batched. Xero limits how fast any application can work, at the time of writing 60 calls a minute and 5,000 a day for each organisation, with only a few at once. A large billing run or month end can hit those limits, so the integration needs to queue, retry and report rather than drop items. It also needs to handle Xero's lock dates, which block postings into closed periods.
What to ask, and what to see
- Is the integration one-way or two-way, item by item?
- Which system owns contacts, VAT, accounts and numbering?
- Show a bill, a credit note and a payment flowing through, and the report that proves both systems agree.
- What happens to an item that fails, and who is told?
- Talk to a firm of your size that has run it through a year end.
Technical notes: small decisions, big consequences
Start with the overview: The details that decide the project
Accounts and finance
- Core accounting is still the gold standard
- One-way or two-way sync? Connecting your legal system to Xero (you are here)
- Units or minutes? How time is recorded
- Your matter and nominal structure
- Making Tax Digital: the firm and its clients
Workflow, data and documents
- Workflow: deep, basic or none?
- Client onboarding and matter inception: portal, e-signature and ID checks working as one
- Custom data: what you rely on, and how you move it
- Precedents, merge codes and macros: your document bank in a new system
Your types of work
- Legal aid: your records, not just the Legal Aid Agency’s
- Litigation: Precedent H starts with time recording
- Family: Form E and financial disclosure
- Private client: where does the tax software fit?
Security and access
- Roles or individuals? How user permissions are set up
- Why manage security twice? Linking application security to Microsoft Entra
- How granular is the security inside the system?
- Who can see what in reporting?
- Shared platform, your data: separation, restore and erasure
- When the supplier is the target: where your data lives, who can reach it, and your real risk
Microsoft 365
- How does it connect to Outlook?
- What did you just give it permission to do?
- What happens behind the scenes? Background integrations with Microsoft 365
- OneDrive is not a document management system
- Microsoft 365 is not a backup
Data and decisions
Official sources
Check the detail for yourself at the source. Rules and guidance change, so always use the current version.
- SRA Accounts Rules: Client money, reconciliations (rule 8.3), residual balances and the accountant’s report.
- Making Tax Digital: The Making Tax Digital programme for VAT and Income Tax.
Where does your firm stand?
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