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

Retainer Agreements v. Flat Fees: Which Is Right for Your Law Firm?

CosmoLex Team

Retainer vs Flat Fee

Whenever a lawyer takes on a new client or matter, they have several options for how to bill. Yet each billing method comes with its advantages and drawbacks—meaning that the right approach varies by practice area and matter type. Below, we break down the different types of retainer fees, flat fees, and important factors to consider when deciding how to … Read More

What Lawyers Need to Know about Trust Accounts

CosmoLex Team

Legal Trust Accounts

Almost every lawyer will handle a client trust account at least once in their career. Trust accounts operate according to very specific regulations, and even if you live and breathe them every day, it can still be a lot to keep track of. Never mind if it’s your first time handling a trust account or you haven’t touched one for … Read More

How Should Lawyers Explain Trust Accounting to Clients?

CosmoLex Team

Trust accounts function very differently from other businesses’ client accounts and reflect the unique level of responsibility and trust in the lawyer-client relationship. It’s a good practice to help your clients understand what’s happening with their money in the first place, but if you can successfully explain trust accounts and why they’re different, that can add to clients’ appreciation for … Read More

What is the right process for taking money out of a trust account?

CosmoLex Team

Trust accounts are client money held in trust by a lawyer or law firm. Even though the money isn’t being held in a bank account that the client has access to, it’s still the client’s money—and must be treated that way. Types of trust accounts The money in a trust account belongs to the client, including the interest. But in … Read More