The key to appropriately managing a client trust account is having a system in place that will alert the attorney as soon as possible that a transaction may have been entered erroneously. Several simple, monthly checks will help you discover errors quickly. In Part 1 of this series, we considered the importance of ensuring that the total balance in the trust bank account always matches the total balance in the client trust liability account; Part 2 discussed the importance of maintaining a credit balance in the Trust Bank Account. In Part 3, we explained why and how involving the client in your system of trust accounting checks and balances is important. This last installment provides a few additional tips for ensuring you catch problems in your client trust account before they catch you.
- Always notify a client before making trust disbursements.
- Never disburse trust funds for which a dispute exists, such as a dispute over an attorney’s bill.
- Never deposit client overpayments into the operating account; instead, deposit the full amount of the client’s payment into the trust account, and apply payment to the invoice after providing appropriate notice to the client.
- Once a client is notified that trust funds will be used to pay an invoice, withdraw all earned funds in one check as soon as practical.
- When paying multiple bills for earned fees from a trust account, whether for the same client or different clients, issue separate checks for each invoice.
Do you have client trust accounting questions? Feel free to comment below, or contact us confidentially.