Image
  • Features
    • Legal Billing & Payments
    • Business Accounting
    • Trust Accounting
    • Practice Management
  • Pricing
  • Happy Customers
  • Compare To
    • Desktop Systems
      • CosmoLex vs PCLaw
      • CosmoLex vs Quickbooks
      • CosmoLex vs Tabs3
      • Other Desktop Software
    • Cloud-based Systems
      • CosmoLex vs Clio
      • CosmoLex vs MyCase
      • CosmoLex vs PracticePanther
      • CosmoLex vs Rocket Matter
      • Other Cloud-based Software
    • Manual Systems
    • Starting a New Law Firm
Login
Try For Free

How do I maintain trust account compliance?

CosmoLex TeamDecember 23, 2019

You are here:
  • Main
  • Trust & Retainer Accounting
  • How do I maintain trust account compliance?

In order to maintain trust account compliance, be prepared for an audit[1] and avoid sanctions, firms need to adhere to a number of requirements. At all times, lawyers should keep in mind they are acting as fiduciaries for trust funds belonging entirely to their client and that no trust accounts funds are the property of the firm.

Trust Accounting Compliance

Record-keeping and reporting

Firms are responsible for maintaining clear records showing the flow of trust account funds, including their usage, purpose, and balances. Firms should:

  • Maintain accurate records for receipts and disbursements for general and individual matter ledgers, including date, matter, purpose and amount
  • Regularly run required reports, including three-way reconciliations[2]

Handling of funds

  • Keep trust account funds and matter funds separate, including proper management of retainer funds, earned fees and settlement monies
  • Never move funds to the operating account which are unearned
  • Ensure credit cards payments are deposited correctly and no fees are charged to the trust account
  • Don’t overdraft individual client trusts
  • Keep trust accounts at banks that are approved by your local bar association

Firms should also be aware of uncleared checks and address them, including contacting clients and following unclaimed funds procedures if necessary.

This is a brief overview of compliance requirements and it’s important to become familiar with the full breadth of the American Bar Association rules. Additionally, each state has their own specific requirements regarding trust accounts, so be sure to check with your local association for a complete set of rules.


References

1. Model Rule for Random Audit of Lawyer Trust Accounts
2. Would You Pass a Trust Account Audit?

Tags:
  • legal compliance
  • trust account compliance

Search Resources

Categories

  • Business Accounting
  • Case Management
  • Cloud Computing & Security
  • Legal Billing
  • Running a Law Office
  • Trust & Retainer Accounting

Recent Articles

  • 5 Key Benefits of Streamlining Your Billing & Accounting Workflow (29:41)
  • How can my law firm keep track of all our cases?
  • How can we get our clients to pay our law firm?
  • When should my law firm outsource bookkeeping?
  • What expenses are tax-deductible for law firms?
Table of Contents
Image
CosmoLex is cloud-based law practice management software that integrates trust & business accounting, time tracking, billing, email & document management, and tasks & calendaring, in a single application.
+1 866-878-6798
Company
  • About CosmoLex
  • Additional Services
  • Bar & Affinity Partners
  • Partner Portal
  • Enterprise-grade Security
  • Pricing
  • CosmoLex Careers
Resources
  • All Resources
  • Business Accounting
  • Cloud Computing & Security
  • Case Management
  • Legal Billing
  • Trust & Retainer Accounting
  • Running a Law Office
Support
  • Knowledge Base
  • Blog
  • Training Classes
  • Find a Certified Consultant
  • Share Your Experience
  • New Feature Request
  • USUS
  • CACA

© 2021 CosmoLex Cloud, LLC. | CosmoLex is a Division of Software Technology, LLC. | Legal | Privacy Policy | GDPR | Subscription Agreement

1100 Cornwall Road, Suite 215 Monmouth Junction, NJ | All product names and trademarks are the property of their respective owners.

[1] For new LawPay customers only. The monthly fee is absorbed by CosmoLex only for active LawPay users (which is defined as processing at least one credit card transaction within CosmoLex each month).CosmoLex may deactivate inactive users LawPay account or charge LawPay’s normal monthly fees of up to $20/month.

[2] If your external accountant or bookkeeper qualifies to become “CosmoLex Accounting Partner”, he or she can access your account remotely (with your explicit permission), without any cost to you or them. Call us for details.

  • Features
    • Legal Billing & Payments
    • Business Accounting
    • Trust Accounting
    • Practice Management
  • Pricing
  • Happy Customers
  • Compare To
    • Desktop Systems
      • CosmoLex vs PCLaw
      • CosmoLex vs Quickbooks
      • CosmoLex vs Tabs3
      • Other Desktop Software
    • Cloud-based Systems
      • CosmoLex vs Clio
      • CosmoLex vs MyCase
      • CosmoLex vs PracticePanther
      • CosmoLex vs Rocket Matter
      • Other Cloud-based Software
    • Manual Systems
    • Starting a New Law Firm