General accounting programs can be used to track trust accounts but be aware that they have three major deficits when it comes to legal trust accounting: they require significant customization, they lack necessary safeguards, and their reporting functions are inadequate.[1] Customization Client trust funds have to be recorded on your law firm’s books as a […]

Lawyers are supposed to act as fiduciaries of client funds, acting in their best interests and protecting their assets. If you are seeing uncleared checks on reconciliations for more than a month or two, you have a duty to look into the funds and try to get them to your client. Additionally, funds may be […]

Law firms, like all businesses, need to produce [simple_tooltip content=’Financial statements are reports prepared by a company management to present the financial performance and position at a point in time. A general-purpose set of financial statements usually includes a balance sheet, income statements, statement of owners equity, and statement of cash flows.’]financial statements[/simple_tooltip] in order […]

If you practice in Canada, then you are required to perform a three-way reconciliation of individual and pooled trust accounts on a monthly basis.[1] In the United States, as of May 2019, 26 states (AL, AZ, IL, IA, MA, MO, NJ, SC, CA, CT, FL, HI, LA, MD, MS, MT, NH, NM, NC, OH, PA, TN, […]

In 2006, due to the increase in credit card fraud, the major credit card companies (VISA, MasterCard, Discover, and American Express) decided to develop uniform standards that merchants must follow if they accept credit cards from clients.[1][2] These Payment Card Industry Data Security Standards (PCI-DSS) are designed to ensure the security of your client’s [simple_tooltip […]

[simple_tooltip content=’Commingling is a breach of trust in which a fiduciary mixes funds held in care for a client with their own funds, making it difficult to determine which funds belong to the fiduciary and which belong to the client.’]Commingling[/simple_tooltip] occurs when an attorney or law firm maintains operating or personal funds in a trust […]

Most state and local bar rules require attorneys to make sure that a settlement check deposited into a client trust account has cleared the bank prior to disbursing any funds.[1] Many attorneys disburse funds from trust accounts as soon as they become available because they confuse availability of funds with the check clearing (a check clears […]

When a client fails to deposit a trust refund check, you should make reasonable efforts to verify any changes to the client’s address.[1] If you are unable to locate the client, check with your state or local bar association to see what your next steps should be. The bar rules may require you to wait […]

Everyone who has balanced a checkbook knows how to perform a two-way reconciliation – you verify that the balance shown on your bank statement, when adjusted for uncleared deposits and withdrawals, matches the balance shown in your books or checkbook.[1] Once you have performed a two-way the reconciliation on the trust account, however, you have […]

A law firm is like any other business in that it must have a system for recording its financial transactions in order to generate the reports that the owners and officers can use to evaluate the company’s financial health. General accounting programs meet most companies’ needs because they allow the business to record financial transactions […]