This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognizing you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful. Read our Privacy Policy<\/a>.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Procrastination is a familiar struggle, especially when faced with tasks outside our comfort zone. Last year, I purchased a beautiful antique piece of furniture with the intention of restoring it. Unfortunately, it still sits untouched in my garage\u2014neglected due to a lack of time and expertise. Trust accounts, unlike old furniture, cannot be left sitting […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-109289","post","type-post","status-publish","format-standard","hentry","category-legal_matters"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/109289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=109289"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/109289\/revisions"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=109289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=109289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=109289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Where to Start?<\/strong><\/h2>\nThe first step is understanding your fiduciary duty to clients. Unearned client funds must be held in a designated trust account, separate from the firm\u2019s operating accounts. Rule 1.15 provides clear guidance on this obligation:<\/p>\n
\u201cThe purpose of a lawyer\u2019s trust account or fiduciary account is to segregate the funds belonging to others from those belonging to the lawyer. Money received by a lawyer while providing legal services or otherwise serving as a fiduciary should never be used for personal purposes. Failure to place the funds of others in a trust or fiduciary account can subject the funds to claims of the lawyer\u2019s creditors or place the funds in the lawyer\u2019s estate in the event of the lawyer\u2019s death or disability.\u201d<\/p>\n
Daily Requirements<\/strong><\/h2>\nTo maintain compliance with trust accounting rules, attorneys must implement daily accounting practices, including:<\/p>\n
\n- Recording all deposits and disbursements with detailed client identification, including online transfers and wire transactions.<\/li>\n
- Maintaining individual client ledgers that clearly reflect ownership of funds and include running balances.<\/li>\n
- Ensuring that, at any given moment, the firm can accurately account for how much money is held in trust for each client.<\/li>\n
- Providing clients with a written accounting when their funds are fully disbursed.<\/li>\n<\/ol>\n
Using dedicated trust accounting software can simplify this process. When selecting software, attorneys should look for programs that allow for easy tracking of client-specific transactions; include a bank reconciliation feature within the software; and generate the three-way reconciliation reports as required by Rule 1.15.<\/p>\n
Monthly Requirements<\/strong><\/h2>\nRegular reconciliation of trust accounts is essential. Many firms unknowingly operate with unreconciled trust records, exposing themselves to the risk of over-disbursing client funds.<\/p>\n
During reconciliation, two types of discrepancies may emerge \u2013 intentional and unintentional. Regardless of the cause, it is the attorney\u2019s responsibility to identify and rectify these discrepancies. My firm reconciles nearly 300 attorney trust accounts monthly, and we frequently encounter the following errors:<\/p>\n
Data Entry Mistakes.<\/strong> An employee mistakenly records a $480 deposit instead of $450, leading to a $30 over-disbursement.<\/p>\nBank Errors.<\/strong> It happens! A deposit may be processed as $500 instead of $5,000, or a check for $480.50 may clear as $480.00. Banks do not always catch their own errors, and attorneys must remain vigilant.<\/p>\nDuplicate Mobile Deposits.<\/strong> A check may be deposited via mobile banking and then again at a branch, sometimes without detection by the bank.<\/p>\nThe Finished Project: Ensuring Compliance<\/strong><\/h2>\nReconciling trust accounts on a monthly basis is not optional. Even if an error was not caused by you or your staff, as a fiduciary, you are responsible for ensuring that client funds remain protected.<\/p>\n
For firms that lack the time or expertise to complete bank reconciliations promptly, outsourcing to a company specializing in trust accounting can provide peace of mind and ensure compliance with Rule 1.15.<\/p>\n
The post Is Reconciling Your Trust Account an Unfinished Project?<\/a> appeared first on Attorney at Law Magazine<\/a>.<\/p>\n\n\n\n![\"\"](\"https:\/\/i0.wp.com\/attorneyatlawmagazine.com\/wp-content\/uploads\/2020\/09\/black%400.5x.png?resize=172%2C63&ssl=1\" "\\"\\"")
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To maintain compliance with trust accounting rules, attorneys must implement daily accounting practices, including:<\/p>\n
- \n
- Recording all deposits and disbursements with detailed client identification, including online transfers and wire transactions.<\/li>\n
- Maintaining individual client ledgers that clearly reflect ownership of funds and include running balances.<\/li>\n
- Ensuring that, at any given moment, the firm can accurately account for how much money is held in trust for each client.<\/li>\n
- Providing clients with a written accounting when their funds are fully disbursed.<\/li>\n<\/ol>\n
Using dedicated trust accounting software can simplify this process. When selecting software, attorneys should look for programs that allow for easy tracking of client-specific transactions; include a bank reconciliation feature within the software; and generate the three-way reconciliation reports as required by Rule 1.15.<\/p>\n
Monthly Requirements<\/strong><\/h2>\n
Regular reconciliation of trust accounts is essential. Many firms unknowingly operate with unreconciled trust records, exposing themselves to the risk of over-disbursing client funds.<\/p>\n
During reconciliation, two types of discrepancies may emerge \u2013 intentional and unintentional. Regardless of the cause, it is the attorney\u2019s responsibility to identify and rectify these discrepancies. My firm reconciles nearly 300 attorney trust accounts monthly, and we frequently encounter the following errors:<\/p>\n
Data Entry Mistakes.<\/strong> An employee mistakenly records a $480 deposit instead of $450, leading to a $30 over-disbursement.<\/p>\n
Bank Errors.<\/strong> It happens! A deposit may be processed as $500 instead of $5,000, or a check for $480.50 may clear as $480.00. Banks do not always catch their own errors, and attorneys must remain vigilant.<\/p>\n
Duplicate Mobile Deposits.<\/strong> A check may be deposited via mobile banking and then again at a branch, sometimes without detection by the bank.<\/p>\n
The Finished Project: Ensuring Compliance<\/strong><\/h2>\n
Reconciling trust accounts on a monthly basis is not optional. Even if an error was not caused by you or your staff, as a fiduciary, you are responsible for ensuring that client funds remain protected.<\/p>\n
For firms that lack the time or expertise to complete bank reconciliations promptly, outsourcing to a company specializing in trust accounting can provide peace of mind and ensure compliance with Rule 1.15.<\/p>\n
The post Is Reconciling Your Trust Account an Unfinished Project?<\/a> appeared first on Attorney at Law Magazine<\/a>.<\/p>\n
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