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
How can my law firm prepare for a trust account audit?
Should your firm undergo an audit of its trust accounts, it’s likely to make you a little nervous even if your documents are meticulous. Given that improper handling of a trust account can lead to an ethics violation, audits can be stressful even under the best of circumstances. This means you want to make sure your records are audit-ready at … Read More
What is considered a misappropriation of trust accounting funds?
Every state has their own rules regarding trust accounts, but they all prohibit the misappropriation of client funds. In order to avoid actions that can be interpreted as misappropriation and land you in an ethics violation, and even possibly result in being disbarred, you should be aware of what it constitutes. As an example of how serious the consequences can … Read More
How do you close a law firm trust account?
Law firms close trust accounts for a number of reasons: switching banks, transferring to new partners or closing down a practice are just a few. Whatever the reason, there are certain steps[1] that should be completed to stay in compliance during the process. Fully reconcile the trust account All funds in the account should be tied to a specific matter … Read More
Mastering The Reconciliation Process With Accounting Software & Bank Data Feeds
Most lawyers go to law school because they are interested in practicing law. It is rare that you find a who went to law school because they have a particular affinity for legal accounting. Unfortunately, as a lawyer managing a practice, you must treat your law office accounting as fundamental. The problem is that accounting can be as equally challenging … Read More