Lawyeringlaw.com Tip of the Month

Tip for November 2012

Be extra careful when handling client funds

Lawyers who hold funds of clients (or third parties) should exercise a great degree of care when handling such funds. The rules of professional conduct in all states contain requirements about the kinds of accounts into which client funds may be deposited and the kinds of records that lawyers should keep in connection with the holding of client property. For example, lawyers should keep a separate ledger for each client for whom the lawyer is holding funds so the firm is able to tell at any time exactly how much is being held for each client. Lawyers should not use or even "borrow" any funds belonging to clients without the client's informed consent and without complying with all rules related to transactions with clients. A partner of the firm should reconcile the trust account each month, or at least review the reconciliation done by another person, to insure that no errors have been made by the firm or by the bank. Also, lawyers should be careful not to disburse the funds until it is certain that any check deposited has not only cleared, but that the bank has actually received the funds represented by the check.