A common practice for law offices is to open a separate physical account for each trust account they have to oversee. This makes it easy to ensure the funds don’t intermingle but it’s an administrative nightmare. CosmoLex includes a built-in trust accounting system that makes it easy to manage any numbers of trusts from a single bank account.
The Complex Web of Trust Management
One trust account is tricky enough to manage. You have to be careful to transfer funds from your trust account to the operating account only as you earn them so you don’t accidentally spend money you don’t have a right to use yet. Meticulous record keeping allows you to keep from making mistakes but it is time consuming. And if you make one mistake, then the accounts fall out of balance and you are going to spend hours trying to repair your books.
Once you add a second trust account — or a third or a tenth — then things become more complicated. Technically you are allowed to comingle the funds in a single account but you must balance each trust separately and must never pull from one client’s to pay another. Sure you can open a separate bank account for each trust but this is expensive and creates a complex network of accounts that can be confusing.
Taking Advantage of Trust Fund Software
The benefit of the trust management features built into CosmoLex is that you can put all trust funds into a single bank account, thus paying only one account charge each month, but you can still administer them as though they are separate accounts. CosmoLex makes it easy to view each matter’s trust separately without being confused by transactions from other matters.
CosmoLex includes the ability to generate the three-way reconciliation reports required by most state trust administration regulations. Not only are these reports compulsory but they help you track each trust so you can ensure that everything is in balance and you haven’t lost track of anybody’s money — an embarrassing mistake that could lead to ethics charges or even disbarment!
If you handle retainers, personal injury settlements, real estate transactions or any of many other legal specialties that require trust management then you need the help of high-quality software. Try CosmoLex, the only cloud-based legal billing product with integrated trust accounting software. Join before April 30, 2014 and you get a 20% discount off the monthly fee for as long as you remain an active subscriber!