Vol. 32, No. 6, 2. Avoiding Problems with the Client Trust Account.

• Author: By Mark Bassingthwaighte, Esq.

Wyoming Bar Journal

2009.

Vol. 32, No. 6, 2.

Avoiding Problems with the Client Trust Account

Wyoming LawyerIssue: December, 2009Avoiding Problems with the Client Trust AccountBy Mark Bassingthwaighte, Esq. While allegations vary, a common complaint made against attorneys often centers around client trust funds. This article will discuss a number of practices and procedures that, if followed, will help ensure that you never find yourself on the receiving end of an allegation of a trust account violation.

First, avoid ethical dilemmas. Although the advice sounds simple and direct, following through with it can be problematic. Rule number one, client funds belong to the client. Rule number two, never forget rule number one. Day to day, these two rules imply the following. Never loan client funds to someone else or yourself. For example, you cannot pay costs for one client with funds on deposit for another. Similarly, you cannot borrow funds from the trust account to cover checks, even payroll. Prior to taking earned fees, make certain to first pay all other disbursements for which the client is clearly obligated to pay. Do not accept a client's word that he/she will take care of making payments on obligations. It is your responsibility.

Unless done prior to the receipt of settlement funds, do not attempt to negotiate a reduction in liens or other known client debts. Once funds have been received, there is an inherent conflict. The negotiation of a reduction in payment to a physician, as an example, is too readily viewed as an attorney trying to maximize her fee. Transfer contingent fees only after the client has acknowledged that the case is resolved and an accounting of all fees and costs has taken place. Make certain that the client and all other parties with an interest in proceeds receive prompt notification of any funds that must be held beyond the expected time of disbursement, the reason for the delay, and what must occur to allow for disbursement. Avoid the use of "non-refundable" advances of fees and, finally, never loan clients money beyond the advancement of costs or fees.

Second, avoid assumptions and misunderstandings. At the initial meeting you should talk with clients about trust accounting procedures and ethical requirements. Revisit this topic if funds need to remain on deposit longer than expected. For...