For lawyers managing a small or independent practice, maintaining client trust accounts (CTAs) can present serious challenges.
Attorneys establishing a practice must set up a CTA or accounts designated specifically for funds that a client or third party pays against future services, such as advances on fees, costs, legal settlement amounts or escrowed amounts (e.g. for business or real estate transactions). Such accounts must be kept separate from personal or business bank accounts.
Rules governing the above accounts vary by state, but one thing is true across the board: The rules are complex, and violations can result in significant consequences — even disbarment.
In our work with growing law practices, we've identified several guidelines that are key to managing CTAs: