Dan Mills, the Practice Management Advisor of the D.C. Bar, answered a request I put out the other day to noted experts in the field of client fund management.
My question: What are the most common mistakes lawyers make with their trust accounts which results in disciplinary action?
1. Not understanding the applicable rule regarding trust accounts;
2. Confusing operating account and trust account transactions;
3. Leaving earned fees in the trust account and thereby co-mingling;
4. Cash or ATM transactions with a trust account;
5. Not keeping adequate records of trust account transactions;
6. Opening a trust account, ordering checks, but failing to make a deposit of the lawyer’s own funds into the trust account to cover the cost of the check. This usually overdraws the account within a few days of it being opened and provides a disciplinary inquiry;
7. Accepting fees by credit card and not being sensitive to whether the fees should go into the trust account or operating account;
8. Issuing funds from the trust account before the deposited check has cleared and the funds have setup;
9. Delegating too much authority to staff regarding the trust account operation and failing to supervise staff with trust account duties;
10. Not asking for help when questions arise about trust and operating account transactions and not knowing where to get help;
11. Putting too much of one’s own funds into the trust account.
Thanks Dan, for this incredible list! Note that Dan knows the D.C. bar rules inside and out, but you should check your Rules of Professional Conduct where you practice.