Trust Accounting for Lawyers: Compliance and Best Practices
Published:
The Critical Nature of Trust Accounting
Trust account mismanagement is a leading cause of attorney discipline. Proper handling of client funds isn't optional—it's an ethical imperative.
Trust Account Fundamentals
What Goes in Trust
- Client retainers
- Settlement funds
- Escrow deposits
- Funds held for third parties
What Stays Out
- Earned fees (must transfer promptly)
- Firm operating funds
- Personal funds
IOLTA Requirements
Interest on Lawyers Trust Accounts rules include:
- Nominal or short-term funds in IOLTA
- Larger amounts in individual client accounts
- Interest remitted to legal services programs
Recordkeeping Requirements
Required Records
- Individual client ledgers
- Deposit slips and receipts
- Disbursement records
- Monthly reconciliations
Retention Periods
Most jurisdictions require 5-7 years of records after matter closure.
Common Violations
- Commingling: Mixing client and firm funds
- Borrowing: Using client funds for firm expenses
- Delayed transfer: Not moving earned fees promptly
- Poor records: Inability to account for funds
Best Practices
- Reconcile monthly
- Transfer earned fees promptly
- Maintain detailed ledgers
- Use dedicated trust accounting software
Automate trust accounting compliance. IntelliBill ensures proper fund handling.
Comments
No comments yet. Be the first to comment!