Post Office Box 6338
226 State Street
West Columbia, SC 29169
1. The money in the trust account IS NOT YOURS.
There is no legitimate way to borrow from a trust account. Sometimes attorneys pay themselves trust account funds before they are supposed to, and it’s often an innocent mistake. In other situations attorneys accidently use funds that they would never acquire the right to use. Either approach opens the door for the lawyer to get into serious trouble.
There are three primary ways that trust account problems occur:
(a) The attorney takes trust account money before it is earned. Defining when the money is actually “earned” is sometimes difficult.
(b) The attorney makes a math error which causes a negative balance in a client trust account. A simple error can have devastating effects.
(c) Trust account theft. It’s rare for lawyers to intentionally take a client money. But it’s often the trusted assistant who knows how to move the money when no one is looking.
2. Not keeping an individual ledger for each client.
Sometimes attorneys think they can keep track of each client's separate account balance in their heads or on single ledgers. But, the rules require individual client ledgers that are maintained the same way the general ledger is maintained. So, not having a separate account balance sheet for every single client who has money in your trust account is a bad idea.
3. Not balancing the individual client balances against the overall account.
Attorneys should not just make sure their overall trust account is balanced at the end of the month, nor should they only make sure that each individual client account is balanced. Compare the two together and balance them against each other. Comparing the overall balances will sometimes reveal an accounting error made on an individual account, where a check or a deposit was overlooked. This simple step will sometimes catch errors that could have resulted in a bounced trust account check.
Sometimes a lawyer's trust account is so messed up, it's best to start fresh by opening a new account. Not addressing the problem does not make it go away. We can help guide you through the minefield of creating, sustaining and properly balancing your attorney trust accounts.