The mismanagement of client trust accounts is a surefire way of getting disbarred. According to an article on thebalance.com, it may be something that you never learned about in law school. Handling client trust accounts is something that, as a lawyer, you need to know.
There are three significant mistakes attorneys make when it comes to managing client trusts or IOLTA accounts.
First, borrowing money from a client trust under any circumstances is never allowed. This includes billing early, using the funds with the intention of returning the money before anyone realizes, or flat out taking the money with no intention of putting it back.
The second mistake is commingling your funds with your client money. You may end up receiving one check for two purposes and deposit it immediately into your operating account. Don’t do this. The payment must be deposited into the trust account before allocating any funds to your operating account. You may also tend to keep your funds mixed in with the client's funds. Once the client’s payment is deposited, you must immediately withdraw the earned funds from the trust account and deposit them into your operating account.
Finally, failing to track client’s funds accurately is the last significant mistake. This entails not putting the client’s name on the trust account's checks, not keeping an individual ledger for each client, and not reconciling your client's balances with the overall account.
These financial issues are complicated, and your main focus should be practicing law not distressing about subjecting yourself to possible ethics violations. Thankfully, LBSI exists. With our staff’s expertise at handling all types of client trust accounts you will never need to worry about finances and can rest easy knowing that your law career is never in jeopardy.