"Each matter (job) has billable expenses (Advanced Client Costs) that were / are paid by the firm's Operating Account."
On your Checks, you use item(s) that are linked to Other Asset = advanced Costs, list the matter or client and this is Billable to them.
"For years the expenses were not allocated to the individual client's for whom the costs were paid on their behalf."
You simply need to include Names on the line items, such as Filing Fees, list this 4 times, allocating to each of 4 matters you just filed.
"Though the firm did invoice the clients based on an external tracking of costs."
Does this mean generally as Income? That would be a problem, of course. This parts wasn't income for them. THat means tax filings are overstated, unless this got offset, later.
"The attorney takes their portion of the settlement and the client is invoiced for the cost and deducted from their settlement amount."
That's why everything you pay for is marked as Billable. Invoicing would clear your Other Asset account (that's why it isn't income for recapturing these expenditures).
"The funds for fees and costs were then transferred separately to the general operating account."
Meaning they bypassed Liability management for funds such as retainers?
"I have been going back through the years (2009 forward) and assigning the costs for the already paid advances to clients."
Then, yours will now be Not Billable.
"So... sitting on the books shows a huge accounts receivable as I have created invoices for each client to cover the costs that were never allocated."
You would create an item linked one Income account for "Write Off." Use this on Credit Memos for each client or matter.
Your invoicing of the advanced costs as billable, cleared Other Asset. Now, your Credit Memo will reduce the overstated Income. Unfortunately, you also need to control Dates on your invoices and dates on these credit memos. You are either Revising history, or affecting Current year. Both of which need to be done under direction of your CPA.
"How do I associate the client invoice with the money already taken from the trust and paid to the firm for those costs."
That part is a bit late to "unweave." I think you just need to address that you just created more AR for something already charged as Income. Is your liability account no longer matching Trust Bank by matter or client name? That is its own set of management to be done.
"Plus, I have to create invoices for the Fees paid to the attorney."
I thought you stated these charges were already done, previously.
"I could just forget about clearing up the past and zeroing it out. Much less work for me yet not a true accounting of the firms business. Any thoughts would be appreciated.'
You pay from Operating for incurred advanced costs as other asset as Billable to them; or, you Paid from the trust account for the client = a Liability item and not billable to them.
If Billable, you invoice. You "pay" from Trust to Firm, by listing the Liability item on the check to the firm; do this for all funds owed to the firm this month, as if that is multiple checks coming through the mail, but it is One Check from Trust Bank to Firm Name, listing the liability item for each Name as required, not billable here.
Process each allocation as a Receive Payment, to clear AR. Send all of these to UF. Select them all for Deposit, to end with the same total deposit as this one check to the firm from Trust Bank.