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Are you facing disciplinary action over a trust account mistake?

How long did your law school cover trust accounts? More than likely, it wasn't very long. This could make new attorneys vulnerable to making an error that leads to trouble. The truth is that even seasoned attorneys here in California, or anywhere else in the country for that matter, can make mistakes regarding their trust accounts. If it happens to you, disciplinary action could follow.

The best course of action would be to avoid making a potentially costly mistake in the first place. The problem lies in knowing what actions could cause issues with your trust account.

The three most common mistakes attorneys make with trust accounts

When it comes to handling their trust accounts, attorneys make the following three mistakes most often:

  • Commingling: A client's money and an attorney's money should remain in separate accounts. Don't view the trust account as an operating, savings or any other type of attorney account. It is for the sole purpose of protecting the client's money. If even a portion of a check from a client belongs in the trust account, put the whole check in it. For instance, if a client's check includes earned money plus, say, a filing fee, then put all of it into the trust account. Then remove the earned fees in accordance with the rules.
  • Accounting: Keeping track of a particular client's money is essential to avoiding running into trouble when it comes to the trust account. Any check written from the account on behalf of a client should clearly identify the client. In addition, it would be a good idea to keep a separate ledger for each client's funds. The trust account balance should equal the total of each client's individual balance.
  • Borrowing: The rules prohibit attorneys from borrowing money from the trust account. If you take out money before it's earned or take out money intending to replace it, you have violated this rule. Some attorneys simply remove money from the account with no intention of putting it back or earning it. This would more than likely be a career-ending move. 

As you can see, without the proper understanding of how trust accounts work, you could easily end up violating the rules. Perhaps knowing what mistakes could occur could prevent you from making one.

If you do make a mistake

If you make a mistake and don't realize it, and you receive a notice from the disciplinary board, it would not be a good idea to attempt to deal with the situation on your own. Your license is your livelihood, and you would probably never recommend to a client that he or she act without an attorney under similar circumstances. You may be better off discussing the issue with an attorney who deals with this and other disciplinary matters on a regular basis.

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Law Office of Zachary D. Wechsler

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Torrance, CA 90503

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