As a lawyer, what should I do if I make a trust accounting mistake?
Making a trust accounting mistake can lead to serious repercussions for lawyers, but proper handling is critical in order to avoid sanctions. If there has been a small error, correct the issue as soon as it is noticed. Delays in fixing known errors can be interpreted as failure to properly manage the trust account.
For larger concerns, you can reach out to a practice management advisor if that’s an option in your state. They can provide guidance on how to handle the situation and are not required to report any ethics violations.
Banks that are approved to manage trust accounts are required to report trust account overdrafts and insufficient funds to the local bar association1, so be prepared that this type of error may result in a grievance investigation. Many states require lawyers to report the overdraft themselves along with an explanation as well.
If the mistake you’ve made has to do with account setup and management, it may be helpful to consult with an accountant who is experienced in dealing with trust accounts.