What Should Lawyers Know About Evergreen Retainers?

CosmoLex Team

Evergreen Retainers

It’s common practice for law firms to require clients to pay an advanced fee deposit or security deposit retainer before commencing legal work for the client. Holding a deposit sum in trust for the client helps law firms know they will get paid when it comes time to bill for the work they’ve done. While it doesn’t always happen, it’s … Read More

How Can Lawyers Avoid Unintentionally Misappropriating Client Funds?

CosmoLex Team

Misappropriating client funds

Misappropriating client funds can have severe repercussions, no matter which jurisdiction you practice in. Although every jurisdiction has its own rules around trust funds, the bottom line is always the same—money in a client’s trust account doesn’t belong to the lawyer until they’ve done the work and billed for it. But what, exactly, counts as misappropriating client funds? Bad apples … Read More

4 Common Trust Accounting Errors and How to Avoid Them

CosmoLex Team

Trust Accounting Errors

Trust accounts allow lawyers to charge retainer fees, giving them peace of mind that clients can pay their bills—and as such, most lawyers will use trust accounts at some point in their careers. Yet even though trust accounts are commonly used, adhering to all the proper bookkeeping protocols is a complex process, rife with compliance pitfalls. Moreover, errors in trust … Read More

What Do Lawyers Need to Know about Accounting and Client Funds?

CosmoLex Team

Accounting and Client Funds

Unlike many other business owners, lawyers need to understand two types of accounting: business accounting and legal accounting. Although legal and business accounting certainly overlaps, there are critical distinctions as well—particularly when it comes to handling client funds. Different types of law firm accounting First, it’s important to understand the differences between business and legal accounting, as well as the … Read More

What Every Lawyer Should Know about Disbursing Funds

CosmoLex Team

Funds-Disbursement

You’ve just won a settlement for a client. Bravo! The funds from the settlement have been deposited into the client’s trust account, and the client is eager to receive their money. As soon as the funds show up as “available” in the bank feed, you cut your happy client a check—hold up. Not so fast. Just because the deposited funds … Read More

What Every Lawyer Should Know About Operating and Trust Accounts

CosmoLex Team

Operating and Trust Accounts

No matter how large or small, almost every law firm needs an operating account and a client trust account. But despite how common it is to need both types of accounts, not every lawyer understands the important differences between them—a mistake with major implications. Below, we’ll break down how to keep it all straight, avoid common pitfalls, and even run … Read More

How to Keep Your Three-Way Reconciliation Accurate and Efficient

CosmoLex Team

Three Way Reconciliation

Most lawyers will handle a client trust account at some point in their careers. Settlement funds (ex: personal injury), retainers, third-party funds, or judgment funds all use client trust accounts. In particular, the retainers that go into client trust accounts help ensure a law firm gets paid in a timely fashion for the work they do. Anyone who’s ever faced … Read More