How do I avoid commingling trust funds with my business funds?

Misbah Jalal Siddiqui

occurs when an attorney or law firm maintains operating or personal funds in a trust account used to hold client or third-party funds.[1][2] Common situations that give rise to commingling are: Depositing a large sum of personal or firm funds into a client trust account to cover a dispersal from trust Failing to promptly withdraw earned fees and reimbursements for … Read More

What is PCI compliance and why is it important?

Misbah Jalal Siddiqui

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 , before, during, and after you … Read More

Is a retainer the same thing as an advance fee deposit?

Misbah Jalal Siddiqui

Upon entering into an agreement to represent a client, attorneys and law firms frequently ask for the client to pay money in advance for fees and costs.[1][2] In many states, attorneys refer to this advance payment as a “retainer”.[1][2][3] In other states, however, the term “retainer” is defined in the Rules of Professional Conduct as  “a fee that a client … Read More

What is the difference between an operating retainer and a trust retainer?

Misbah Jalal Siddiqui

An refers to funds received from clients that are deposited into the law firm’s operating account. A refers to funds received from clients that are deposited into the attorney’s trust or escrow account.[1] In most states, a retainer paid by a client in advance for unearned fees and future costs is considered to be the client’s funds and must be … Read More

Why are my client trust accounts showing as liabilities on the balance sheet?

Misbah Jalal Siddiqui

Bank account balances, whether trust or business accounts, appear as assets on the balance sheet. The total amount of assets recorded on the left side of the balance sheet must always equal the total amount of equity and liabilities shown on the right side. When your firm deposits a client or into a trust bank account, the trust’s asset balance … Read More

Why would I want to use an Evergreen Retainer?

Misbah Jalal Siddiqui

Attorneys provide services to clients “on credit” because they generally don’t bill the clients until after they’ve actually provided the services. The danger for law firms is that they will do the work, but the client will refuse to pay the bill. If the bill was for a significant amount of legal fees and costs, the client’s failure to pay … Read More

What is an evergreen retainer?

Misbah Jalal Siddiqui

Many law firms require clients to pay an [1] or a retainer[2] – a sum of money paid up front to be held in trust and to be used to pay invoices if the client fails to pay. As representation continues and fees climb, however, attorneys can rapidly find themselves in a situation where the client owes thousands of dollars … Read More

Maintaining Trust Compliance While Switching Banks

Misbah Jalal Siddiqui

Trust accounts are known for having a large number of rules and regulations that lawyers must follow when managing them. With such a high bar for maintaining compliance, migrating a trust account from one bank to another is a lot more complicated than moving all the funds to a new account and closing the old one. Following the proper steps … Read More