Should your firm undergo an audit of its trust accounts, it’s likely to make you a little nervous even if your documents are meticulous. Given that improper handling of a trust account can lead to an ethics violation, audits can be stressful even under the best of circumstances. This means you want to make sure […]

Every state has their own rules regarding trust accounts, but they all prohibit the misappropriation of client funds. In order to avoid actions that can be interpreted as misappropriation and land you in an ethics violation, and even possibly result in being disbarred, you should be aware of what it constitutes. As an example of […]

Law firms close trust accounts for a number of reasons: switching banks, transferring to new partners or closing down a practice are just a few. Whatever the reason, there are certain steps[1] that should be completed to stay in compliance during the process. Fully reconcile the trust account All funds in the account should be […]

Most lawyers go to law school because they are interested in practicing law. It is rare that you find a who went to law school because they have a particular affinity for legal accounting. Unfortunately, as a lawyer managing a practice, you must treat your law office accounting as fundamental. The problem is that accounting […]

The majority of lawyers know basic trust accounting principles, but throughout the course of business, instances arise that require more in-depth knowledge. Scenarios such as a lawyer leaving the firm and taking their clients with them or the firm needing to switch banks may not be daily occurrences, but it’s still critical that the proper […]

Making a trust accounting mistake can lead to serious repercussions for lawyers, but proper handling is critical in order to avoid sanctions. If there has been a small error, correct the issue as soon as it is noticed. Delays in fixing known errors can be interpreted as failure to properly manage the trust account. For […]

The handling of interest from settlement funds kept in trust accounts falls under Model Rule 1.151 regarding the safekeeping of property. Because the funds are considered to be the property of the client as long as they remain in the trust account, the client may be entitled to any interest accrued during its term in […]

Keeping track of individual client ledger balances and making sure there are sufficient funds to cover any disbursements is a requirement of trust accounting compliance[1]. To prevent a situation where there is an overdraft on a client trust account, you must keep careful track of the balances of each individual trust account. These funds are […]

Certain states require that client funds only be placed in accounts that generate interest[1]. Typically trust accounts, whether IOLTA or individual trust accounts generate interest.  The primary difference lies in where the interest goes. With IOLTA accounts, interest goes to a state foundation for the purposes of providing legal aid to those who would not […]

Requiring a retainer for your clients to get a financial commitment on their end presents a number of advantages, including: Maintaining cash flow For law firms, consistent cash flow allows you to plan for covering costs associated with payroll and traditional business expenses such as copiers, leases and equipment. Sending out invoices takes time, but […]