Handling Client Funds: The Lawyer’s Fiduciary Responsibility and the Administrator’s Role

ALA Legal Management, February 2009This article is in PDF format. Here is a sample:

Every lawyer-client relationship begins (or should begin) with a written engagement agreement that includes how and when the lawyer will be paid. As a general rule, most engagement agreements stipulate that the client’s payment for work that has been performed is to be deposited into a lawyer’s general account, and payment for work that will be performed is generally to be deposited into a client’s trust account.

Managing and accounting for client funds held in trust is a lawyer’s personal responsibility. Although several good computer software programs exist to assist with trust accounting, including QuickBooks by Intuit, the lawyer who receives clients’ trust funds bears the responsibility of accounting for every penny. In an accounting sense, these funds are a liability of the law practice to the client, must be kept in an entirely separate account, and cannot be commingled with any other law firm funds.