As a lawyer, you help clients deal with problems every day. Of course, not all problems involve intentional misconduct. That is, your clients may sometimes run afoul of the law simply by making errors or omissions. Still, these missteps may prove no less consequential than intentional actions.
If you have a trust account, mismanagement may earn you an Office of Chief Trial Counsel investigation. As such, when it comes to client money, you must be exceedingly careful. Here are three trust account errors that may get you in trouble:
- Keeping sloppy records
You have an affirmative obligation to keep comprehensive records detailing how much money each client has in your trust account at all times. There are a variety of ways to fulfill this obligation. Still, you probably want to note each client’s reference number on every check you write. You also likely want to generate routine reports. Finally, you should balance your trust account regularly.
- Borrowing funds
The money in the trust account does not belong to you. On the contrary, your clients own the funds in the account. You must remember this fact and draw an uncrossable red line. Simply put, if you borrow money from the account, you are in fact stealing it. This is a fast way to end your legal career.
- Commingling funds
Your money belongs to you, and your clients’ money belongs to your clients. Even depositing small amounts of non-client money into the trust account may be problematic. As such, you should keep separate accounts for operations and for client expenses. You should also follow professional guidelines for managing accrued interest on trust accounts.
Trust account errors may put your license to practice law in jeopardy. By understanding the sort of errors that typically cause problems, you can better plan for avoiding them. If you are facing a complaint, though, you must act diligently both to defend yourself and to protect your law license.