OK. I don’t enjoy balancing and reconciling my trust account, but it’s got to be done. If you are hanging out a shingle and planning to accept advance fees or third party funds, you’ve got to have a trust account. The State Bar requires that a trust account be balanced every month, and that it be reconciled every quarter. Aren’t balancing and reconciling the same thing? Nope. To balance your account, you check off the deposits and withdrawals in a given month and make sure the balance checks out with the bank statement. To reconcile your account, you must add up each individual client’s balance within the account to be sure the balance matches that of your bank statement. You can use a computer program to generate a reconciliation report, so it’s rather painless. Just make sure the report lists the individual client balances. There are lots of programs out there designed for law firm accounting and trust accounting. I happen to use PCLaw. Keep in mind two things when opening a trust account. 1). Know how to manage a trust account yourself before delegating to someone else, and 2). Lay your eyes on the trust account books every month. First, you can’t teach someone else how to handle trust accounting unless you know how to do it yourself. The State Bar has a wonderful trust account handbook on line that provides everything you need to know. http://www.ncbar.com/programs/trust_gu.asp Second, if you delegate the daily management of your trust account, you are still responsible for supervising that person. Bottom Line: if there is a problem with your trust account, you will be held responsible.
