It Is Time To Review Your Client Trust Account Practices

Handling client money happens daily in every law firm. State ethics rules require most attorneys to use trust funds to segregate client funds from firm funds. Maintaining these client trust accounts (CTAs) while meeting your state's ethics rules can be onerous, but following the rules is better than sanctions or potential disbarment. CTA rules vary by state, but let's look at ways you can monitor your CTA practices.

TIMING PAYMENTS

You sometimes may be tempted to help clients out by disbursing settlement funds before the funds have cleared, especially if your firm has a single account that holds all client funds instead of individual CTAs. Settlement checks may not clear for a variety of reasons, including a missing, insufficient or incorrect endorsement; insufficient funds; a drafting error; or a bank error.