Should an IOLTA account have overdraft protection?
Client trust accounts are special bank accounts used by attorneys to hold deposits paid by clients for future services. These funds can’t be withdrawn from the account until an attorney or law firm’s fees are earned and the client is given an invoice[1]. For cases involving a large dollar amount or where funds will be held for an extended period … Read More
Who can and should be a signatory on a trust account?
Establishing a client trust trust account for your law firm means designating signatories. Signatories are able to sign for account-related tasks such as issuing checks or withdrawals from the account. Before establishing any signatory, consider the significant responsibility entrusted to you with your client trust accounts. Lawyers are obligated to protect the funds and property included in that trust. Any … Read More
What name should my law firm put on trust accounts?
When opening a trust account, what name to put on the account can cause some confusion. Attorneys often wonder what the name should be, especially depending on whether or not the trust account is an IOLTA account with multiple client funds in it or a single client trust account. Should the account name be: The managing partner at the firm … Read More
For trust accounting records, what happens if my bank doesn’t return deposit slips?
As part of proper trust account record keeping, law firms are required to keep copies of deposit slips associated with the account. In the event of an audit, these slips help to create a paper trail to verify what your books say. Without them, an auditor could be left wondering what actually happened with the funds. In some cases, banks … Read More
What is the difference between a flat fee agreement and a retainer?
When you develop your pricing structure and client payment options for your law firm, you’ll need to evaluate a number of issues. Hourly billing, contingency fees, alternative fee structures, and more. However, questions often arise over one topic in particular: the differences between flat fee agreements and a retainer. For firms using a flat fee arrangement (also known as “fixed … Read More
When can a lawyer take money out of a retainer?
Retainers are helpful resources for law firms to manage their client’s payments. Not only do they provide funds to kick start their working relationship, but they also make it easier to pay invoices. Retainers are often paid into an Interest on Lawyer Trust Accounts (IOLTAs). Attorneys are entitled to pay themselves out of the account as they complete client work. … Read More
Who can have access to our law firm trust account?
As a law firm grows, a lawyer’s ability to handle all of the tasks that go along with it becomes increasingly difficult. At a certain point, you may need to bring on others to help with things like billing, accounting and client trust accounts. But who can actually access those accounts? What the rules say Having a bookkeeper or paralegal … Read More
When should our law firm create an individual trust account?
Client trust accounts are common for law firms. But how do you know when a client should have their own individual trust account rather than keeping all client funds in a single trust account? With a typical Interest of Lawyers Trust Account (IOLTA), all the funds of clients are kept in a single trust account. Each of those clients and … Read More
How can I do a three-way reconciliation?
For law firms, conducting regular three-way reconciliations[1] is not an option if they handle trust. Bar associations require these reconciliations as a way to verify that lawyers are fulfilling their fiduciary responsibilities and recording and tracking client funds properly. Many people are familiar with the traditional two-way reconciliations where you compare your checkbook balance to your bank statement. If the … Read More