It's not enough for your
Attorney billing and trust accounting software to track retainer funds in trust accounts. You need trust bookkeeping safeguards, too.
Let's go back to what we know about professional ethics. The only things that get deposited into a trust account are as follows:
Funds for real estate transactions (i.e. escrow funds)
Personal injury settlements
Other settlements / judgments
Collections
Unearned retainers
It all comes down to fiduciary responsibility. So you don't co-mingle personal funds, earned fees, and operating expenses into your client's escrow account.
The other thing you've got to do is segregate client funds. To keep from co-mingling client A's funds with client B's money, you either keep the funds in separate accounts, or as separate entitieseach with its own balance and transaction reportin the same pooled escrow account.
Finally, if you've overspent what a client has in retainer account, you've got to cover any overdraft amount back from your personal fundsimmediately.
Every month, you've got to show that you've reconciled every escrow account
matching your books with your bank statements. The balance in your client's bank escrow account has got to match the total cleared in your booksmonth after month. This is where you'll identify any missed steps or other mistakes. Skip this stepand you're waiting for disaster to strike.
If you're keeping good records, then you're leaving a paper trail for potential auditors. You're keepingnot just your account statements, but also canceled checks (if applicable), check stubs, deposit slips (make your own copies), copies of all receipts, and a disbursement journal. In place of a disbursement journal, you can report from a good
trust account software, such as
Easy Soft Easy Trust .
Check your state's ethical rules and regulations for state-specific
trust accounting management rules. In fact, you should keep a current Rule Book right in your offices.
Don't lose sleep over trust fund accounting. Follow these simple rules and you'll always be prepared for an audit.
