Handling Trust Funds

Welcome to Accountants LawPod, where accounting professionals and law firms converge. Hosted by Lynda Artesani, Sarah Prevost, and Stephen Libhart.

Welcome back to the podcast, everybody. And, you know, Sarah, you say you never wear anything on brand, and today I see that you have a sweatshirt on that has a name of a software that you could possibly—

Oh yeah, no, see, I did like this. I was like, what do you think?

I'm cold.

It's cold here.

It's hotter than you know what here. I just took the dog out and I'm like, oh my God, it's so hot. I can't imagine having a job here in Florida outside. It's that hot outside.

Oh yeah. Oh wow.

Yeah.

Like a steam iron in Florida.

Oh, it's really, really warm. So Steve's back up in his beautiful Colorado high, high-leveled office.

You know, we're supposed to be up to— I think we're going to get up to like, yeah, 85 today. Not bad.

Oh, 85. I don't even know. We're at like—

The nights have been getting really cool. It's been so nice.

Oh, that's what we'll have on our happy hour, happy camp thing. It'll be like 65. I'm already thinking I had to pack a few layers because That's a little chilly for someone who's been living in— what is it right now? 93, but feels like 111.

Yuck.

And I'm at 58.

50.

Oh my God.

That's why I'm freezing. I'm like, oh gosh, I got to— She brought out the sweatshirt. Yeah, I should just put this blanket around my feet.

This is kind of a boring subject today that we're going to talk about. Handling—

It is right now.

Handling trust funds. So I think actually it's not a boring one. It's actually probably going to be a popular one because there's a lot of rules around handling trust funds. And I know we've talked about this many, many times on this podcast, but the rules are really critical to successful law firm operation. What do you think the first and most important rule of handling trust funds is?

Well, actually, I think Steve has the best way of handling trust funds.

Oh yeah, how are we going to do that, Steve?

How do we do it? How do we handle trust funds, Steve?

He already forgot Sarah. He forgot.

Just put them in the bank and pray.

Yeah.

Was that the right answer?

Yeah, that's the right answer. Oh my gosh, I still have a residual cold.

I think, you know, I go into the— I was talking to Sarah earlier this morning about trust cleanups and what we see when people— when their— where their trust accounts go south on them and trying to educate them and, and help them not be so scared that they're like deer in headlights over the cleanup and teaching them the compliance, you know, understanding how a trust account works and why it's regulated the way that it is. In each state, county, jurisdiction, how, you know, whatever. Because go back to the podcast we recorded with the maps and how we talked about all of that. And then, you know, the local rules and regulations and the interest and commingling and separate accounts for each client. Sometimes that happens, you know, with larger dollar amounts and, you know, all of the nuances, the things that can happen with trust accounting. It's not just a simple one-off wave the wand and it's done sort of thing. And it's typically the one thing that gets attorneys in trouble more than anything else.

Mm-hmm.

It's also the one thing when you talk to them, they're like, I don't have any trust. How many times have we had meetings and like, I don't use trust. I, I, I don't have to do that. It's like, okay, you know, my account's easy. I don't have trust. And it's funny that they, if they can get around the trust, having to have a trust account, they will do that because it's scary. I mean, if they get in trouble, they can get in some serious trouble. Serious trouble up to losing their license to practice law. So it's really critical that the funds are handled properly. May— basically, they're taking in money that's not theirs as a prepayment to hold for their future services, and it's put in a special bank account that's highly regulated. You have to make sure it's balanced. We have an obligation to know every penny that's in it, who it belongs to, because it's one account with multiple people's money in it, we need to know each individual's money in each. I always like to consider it like a little check register, each in and out of what's in there for each individual person. So at the time of doing the reconciliation, if my account had $1,000, I'd report the $1,000. And then it's, it's also a timing thing. So they can't just say, oh God, payroll's Friday, I'm going to just move the money over.

Yeah.

Do that. It has to be— you have to perform the work, bill the client, move the revenue.

And, and it's so important right now, the piece that you're talking about, that your client agreement spells out what you're going to do with their bills and how you're going to handle their trust money.

But also how you move the money. So this has come up where money is moved, it's earned, but it's been moved out as distribution right from trust.

Yeah, that's a big no-no. Yeah, you got to move over. You got to move over. Because it looks shady.

Let me ask you this. Just the other day, I want, I want your, your answer on this. We already know what the answer is. But the other day we had a client who needed to refund some trust money to their client. They moved it from the trust account to the operating account and then wrote a check out of the operating account.

Go. You can do that.

I mean, no, no, you— those funds are not protected.

I see it all the time, Steve. They don't have any. They don't have them in their office. And so that's their way of moving it over. I know it's not the right way. You want to have an IOLTA check and send it out.

But if you don't—

Exactly. You don't have—

What if the IRS comes in and seizes your checking account and you've, you've got that money in there that belongs to the client? You need to disburse that out of the, the trust account.

You, you really, you need to follow the money in the way that it was expected and intended. So the money comes into trust, it's held as what it's supposed to be, it's earned when it's earned, that goes to your revenue, your operating, whatever you call it, I don't care. And then from there, that's your decision at that point. I mean, we're not saying no, but you have to follow the trail of what is the proper way of identifying.

And you can't, you can't use your trust account as a savings account. Once you earn it, you've gotta take it.

Mm-hmm.

Because, and that's considered commingling. So many people do that. They're like, oh, I'll take it in a month when I need it. No, you, you earned it. You've gotta take it because that's your money and you're now commingling if you leave it there.

And unexpectedly things do arise, like, you know, it's there. The expectation was to move it. You didn't do the transfer as expected. Okay, or the, the writing of the check as expected.

Okay.

Uh, but that's when you have people like ourselves that we're coming in and ensuring, are we seeing that the way we should be seeing it? We see that you still owe yourself some money. Be helpful if you moved that over. Or did you realize that the bank who promised— I can't tell you how many times we hear that— promised never to charge that IELTS account ever, ever, ever, ever. They're only going to do the operating. And they charged you a wire fee for incoming and outgoing. Okay, well, that's a problem. Um, just like things like that, that, that are small, that amount. Or you see this a lot, you give somebody the wrong link to pay, so they send you the money, or, or they have an old link, or they have an old information about how to transfer money in, so it goes to the wrong bank account. Which is why we're so— I understand that this is a, a way to do business. A lot of attorneys do this. A lot of law firms, they put all— they air their dirty laundry at the bottom of their invoice. I'm like, well, why do you have your exposed bank accounts there? And something happens that that account gets compromised. You gotta close it and then move it over, right? Well, people are gonna try and send money to that account. Inadvertently. This is why these things shouldn't have this ability, that you shouldn't have the ability to have an old law pay link to pay. So it's like enumerating circumstances, I feel. But you know what, Steve, I like your analogy. It's just like throw it in the bucket, see what happens.

See what happens. Well, and I think it's important too. I've run into this before where the client— I go back to the client agreement. You re— need to really spell out how you're going to use their money. And let's use an example of paying for, let's say, expert witnesses. Are you going to pay it out of the operating account and bill the client and then take it from trust? Or are you going to pay them directly out of the trust account? You really need to be very transparent to the client on how you're going to handle their money during the work that you perform for them.

Mm-hmm. Well, and I notice with California specifically, which caused I think a workflow change. I'll just say it in a nice way.

Sure.

Yeah. You know, because interpretation of when that revenue is collected versus what the state wants to see. And I feel honestly, maybe you all feel this way, a lot of these rules definitely are coming out of the moments of probably reviews and audits and compliance checks.

Sure.

And seeing that they're being neglected because out of— and we see this sometimes, the approach is, eh, okay, well, you know, it's there, just let me know in the end. Well, that lackadaisical kind of, eh, I've been doing this for a long time, trust me, I know what I'm doing. We're at the— we had a firm that's been in business for years, and of course we went through and we had to redo the, the ledgers, and we had to rebuild the entire thing because the person before us gave the wrong information, which then caused the audit to get deeper and shorter in the time frame. I think— I feel like that individual who was the compliance person, I felt like what Lynda gleaned from that was, nope, sorry, your window just got shorter because you didn't comply the first time and you didn't honor the request.

Wow.

Quit on the, on the attorney.

And walked out. That individual walked out in the middle of this.

Weeks to get this big body of work over to the bar in their forms. In there, it, it was all had to be typed in their PDF. So all those we had to replicate in their PDF. They didn't want QuickBooks reports. Yeah, they in their PDF and they were already sensitive to the fact that it wasn't done right the first time. And it was, you know, that was a huge sense of really— I remember Sarah and I taking a call. We were working on a weekend and the attorney was calling. I said, should I take this? And I said, I'm going to take it because I know he's so freaked out because I think he was just so blown away that the person just left. And rightfully so. I mean, I remember part of the story was that this all came because he wanted to move money from an old bank to a new bank, and the person gave them the amount to move, and they didn't know or didn't pay attention to there was a check outstanding, and that check outstanding got cashed and it went upside down. Oh no. Okay. But you know, they didn't factor that in when they moved the funds over. So, and that's the scary part of, I mean, how many times we met attorneys that are like, well, my trust fund didn't balance, so I just moved it all to a new bank. Like that's gonna be the magic wand that fixes everything. And actually, It can make things worse, as it is.

Makes it worse.

Well, you know what's interesting is I've heard that being discussed in CLEs from on the bar side, but the caveat that's never remembered is, okay, you can do that while you clean up the problem. So they hear, oh, just move it to a new account. And they've told us that outright. Oh, the bar just said to do this. No, that's not what they're saying to do. They're saying use the protected funds over, but go back and do the homework on the other funds.

So yeah. And you don't want to close that old bank account out either. You don't, because you need to be able to historically go back and find where the problem was.

You can't get statements. Like Sarah just said, you can't get statements. And that's the thing. And I think a lot of times we've seen attorneys that have— what's this other old account you have? Oh, that just sits there. They're too afraid to close it, so they just leave it in place. It just sits there until—

So Lynda, what do you do when you have uncleared checks out of the trust account and, well, maybe it's 8 or 9 months later and they still haven't cashed them? What do you do?

You have to stay on that every single month with the attorney. These are the outstanding— especially like anything that's dated the prior year. You got to be on that because they're like, well, what do you want me to do? Well, somebody in the office needs to try to contact this person. You have details on the person. Contact, find it. You have to make an effort. It says it right in the bar rules. Usually if you are— it says it in there that you have to do your due diligence to try to get those funds back.

And document what you did.

Yes. And even if it's a penny, even if it's a penny. So that's a big part of it too, because how many times you picked up a new client, Stephen, you're looking at the records and You see the balance is one thing, but the, the balance in QuickBooks is this much different or whatever program you're in because it's, there's a bunch of outstanding and it's, and sometimes it's deposits. Like how could deposit be outstanding? You either put the check in the bank or you didn't. We need to know what that is. And we see that a lot too with some of the, the legal software. Things get put into the legal software, you know, the legal tech. And then it, it just gets sent over to QuickBooks and then it sits there and then it's never happened. Or I don't know. I don't know how a deposit gets entered, but we've seen it where it's entered and it never clears the bank.

Yeah.

I don't know how that magically happens. And if it's last year's deposit, something's wrong. You didn't put it in the bank, you lost the check. Try to find the check. I want to remove the deposit. And, you know, did you ever receive a check?

I've seen where an attorney will have a client who might be having financial challenges. And so they'll go ahead and post— they'll take a check, they'll take a $10,000 check and they'll go ahead and go and post it as if they deposited it, but they're saving it in a desk drawer until the client has more money. That's— I've seen that.

Yeah.

And that's like, no, no, you can't.

That's not a good practice. That's not a good—

yeah, because they can get buried. It gets— well, the thing too is when you're looking at— it's important to have it go through the proper channels because when you're looking at revenue as far as time of capturing revenue, because what's behind every revenue dollar that's walking in the door? It has an allocation point in your business. So your revenue is coming in, there are payroll percentages that are allocated of that, taxes allocated of that, your pay as an owner allocated, all these percentages to run the business. And if you're doing this, you know, where retainer money is walking into the wrong bank account and then you later realize, but you've already spent the money like that, that whole workflow. That's why it's really important to have a clean— to your point, a clean agreement. In addition to that, a clean set of payment links, a clean set of practice You know, as soon as something went in the wrong way, it gets identified, move it over. It's all of these little nuances.

In some states, the compliance rule is even if the attorney's holding money, and we've seen it where they're holding money on an account, it's never had any activity for a year, you still have to let the client know that that money is there. You have to send out a statement and it has to say, here's what's inside of your money that we're holding. And then I think there's— I love that.

What about the money, Lynda, that they get, like Zelle and Venmo? And what about all that?

Weird. I know.

Yeah. Like, yeah, it does go in the trust account, right? Like, some— we've seen it.

Yeah, we've seen people try to monkey the system of Intuit Merchant Services and connect it to a trust account. Usually they find— they get found out at some point that that can't be connected to that. And then, then it's a really big mess and a problem because Intuit will hold the funds and not release the funds for a bit. We've seen that happen. We also see where attorneys will have the— they're, they're not sure if their bank account is balanced properly, so they may bill the client and have the funds to pay the client, but they never transfer the funds over to the operating. And that's another compliance issue because you, you can't do that either because now you're withholding the revenue from your books because you're not showing that that money has been earned. If you don't move it, you leave it as a cushion. You can't leave it as a cushion.

Yeah, that's what Steve was saying earlier. That's a commingling at that point.

Yeah. It's a big— we see that a lot. You know, a lot. So, I mean, there's a lot of rules, definitely a lot of rules around this, and having good processes in place in the firm is critical. You know, how did the money come in? You need to have processes in place. We've seen it where people have had law pay. And they didn't connect it to the right bank. I mean, LawPay works great if it's set to be trust and it's set to be attached to the trust bank account. And then any fees, if they're using merchant services, those fees go to operating. We've seen it where people have done it wrong and the money was coming into operating and the fees were coming out of operating. But when that happens, you're looking at a problem there too, because it can't— and then you're moving it over to trust. It starts to look like you're doing that game where they shuffle the— The shell game. It's a shell game. They're shuffling those little cups around and where'd the money go? Like Sarah says, follow the money. You start to do that, that doesn't look good if you're gonna have our audit and they need to come in and observe your records. I mean, once in a while you put the bank, but you put the check in the wrong bank account. Okay, that can happen. I mean, we've seen it happen where attorneys meant to move it to the operating, but they have their own personal bank account at the same time in the same bank as their trust account and their operating account and they accidentally put it into their personal. That's just not a good thing to do. And if you do, hurry up and put it back, write lots of notes in the file because, you know, that audit might be random and comes up in a couple of years and you're not going to remember that whole scenario of what happened. Lots of notes is critical.

I was going to say, we've seen it before where when we're going through a cleanup and then we understand that, you know, costs associated with the file have been spent out of the trust account where actually it was written out of the wrong— it should have been out of the operating. Then it gets recouped on the revenue side, and now you have a negative ledger.

Yep.

And at that point, where's the oversight on ensuring that what's in the ledger aligns with what's going to be on the bill and where were costs paid? And that's especially important When you're at time of settlement for the— we see the money come in and then they want to send it out really fast because the client's been awarded the money. But yet you've really got to do the little bit of diligence. You got to put that little buffer into Steve Swain on the agreement, and you got to be able to put that little moment in to make sure that you've evaluated the entire thing and you haven't over-given yourself funds and/or overcompensated the client inadvertently because you totally forgot about a lien that hasn't come in or a That happens too with personal injury attorneys.

I just met with that, uh, one of our coaching clients, and yeah, it was one of the things I said, don't go even, even if the insurance company wrote the check and you deposited an insurance check. And she said, that just happened to me where a pretty large insurance company gave us a settlement fund and then it all bounced.

She said, oh my gosh, yeah, and she said, um, and made a mess.

And she was just surprised that, that a big firm like that. I said, yeah, they don't put everything in one checking account. They, they probably shift it over as these things settle and send it out. And it sounds like somebody didn't shift it over or whatever happened and they replaced it. But she said it was a— it's a nightmare.

It's a nightmare. Well, those large insurance companies use a lot of sweep accounts. So, you know, it could have been timing over a holiday weekend or something like that. They cut the check, off it went. It didn't get swept properly. I mean, there's a lot of things that happen there.

And that's one of the other tips too with handling trust funds is sweep accounts. So You can have a wire account with, if you've got people wiring money into you, you don't want to expose the actual account that has the money. So have a special account for wires in and then they sweep into the appropriate IOLTA account. It does make more work for us to kind of track it, but if it's in there, it's gonna protect your account so that no one steals, oh, here's the routing in this. And then makes a fake check and it, it's just gonna prevent fraud and you want to protect yourself. And that's something that I think is really important. And maybe a lot of the listeners haven't thought of that, but it's also a good tip.

Oh, that's, that's so important.

To, to kind of come forward if they see there's an issue.

Yeah.

I mean, it's awful. Fraud happens at the bank level at a, at a firm we're working with. It makes a big mess.

Oh, it's, it's happened. We, we just kind of set this up for a different client. But it's the point of, because we're saying this is our bank account and our routing number on our bills, or this is how you send us money for our trust, and we're sending it via email. So we're giving an exposed space of time, and prying eyes will have— that's why we, when we, we all preach this in a, in a positive way, like, please, if you're gonna, especially if you have multiple bank accounts because you're working in multiple states, have different colors, different number series on your checks to identify what check goes with what type of state, just to keep it out of the space of— it's convenience of having an all-in-one bank institution. I completely understand that, and I'm, I'm for that. But we do meet a lot of clients that do separate institutions for safekeeping.

Mm-hmm.

But in the same token, you still have like the color coding. You got to delineate these things. I find it myself true of everybody's got a blue bank debit card. Everyone's got a blue credit card. Okay, which one am I using? Right. I'm going to keep track of the numbers at the end that identify with the business account versus the personal account.

That's so hard sometimes. Did I use— I hopefully didn't use the business one. Yeah.

Yeah, it happens. It's not your intent to do it wrong. But we, we need to help you make sure it's right and get it corrected. And that's the— and that's a lot of the guidance that goes on with it. So, but also you've got to be able to accept different forms of payment. You just saying that you only accept checks or only accept wires doesn't fit all clients.

So— Especially in your practice area, certain practice areas, you have the ability to pay by credit card.

Yeah, yeah.

That's why we like Confido. Which is Gravity Legal, used to be.

Yeah.

Because it's easy for us to be really transparent with tracking the fund. That's our preferred one. We will work with LawPay as well, but I mean, we like Confido a little bit better. But there's many of them and a lot of times you might come to a firm that they've got a whole different system working. Just have to figure out how it works and work with that. But those are things that all of these are, again, workflow processes that we all have to, implement in the law firm and implement them for outsourced bookkeeping and accounting firm. But also I think when it comes to handling trust accounts and trust funds, having that ability to, from our point, we have to know what was in each deposit, especially if it's a group deposit for, you know, going into the operating or into the trust. We need to know what the checks were and have some kind of system in place to let us know about those.

Mm-hmm. Mm-hmm.

It's just you really want to track a lot of where the money's coming in and where it's getting put. It's gonna save you a lot of anguish if you set up good processes. And, you know, we've had used Google Forms and things like that that we've set up that money comes in the law firm. People I call 'em boots on the ground that work in the law firm, the legal assistant or the paralegal or the, you know, those legal secretary, whoever will kind of fill the form out so we know what's going in the bank. And I think that that's important on our side, because it, it's a secure way for us to know what's happening, because you don't want to be photocopying checks and emailing that, because now you're exposing a whole bunch of routing numbers. Do you want to have good systems in place to protect the client? And that's a big part of being a professional and having it set up to be I think sometimes when the attorneys work with us, they're like, wow, you have this all figured out already. Yeah, because this is what we do. And that's all part of hiring somebody that knows what they're doing when it comes to this, because it's really critical. I mean, it's such a big part of their job and they're fully aware of the fact that it's important to handle the trust funds properly. And most of them are like, I don't know what's in my trust account and I'm really nervous. And, you know, we can ask them, does this keep you up at night? Oh my God, it really does. I know it's messed up. You know, I messed it up, it was messed up. I tried to do it on a spreadsheet and it gets just to be too unmanageable. You know, helping them is one of the kind of the fun parts of our job because we figure it out and it feels good to figure it out. It does. It's very satisfying when we kind of, oh, I think we got this. And we start to see patterns. Oh, this is when so-and-so must have been working there and they were doing it this way. Then all of a sudden it's somebody else started to tackle the job and now it's in a different pattern.

It's so true about patterns. Steve, I don't know if you experienced this, but well, so-and-so decided to do it this way, and then they changed the way they were going to record it. That's okay, that's brilliant, but should you have checked to ensure that that's the accurate way of doing it? Because you just decided to revert and about-face because you got a snippet of some, maybe a podcast or a blog that said, oh, you should be doing it this way. Well, it's mayhem. I feel like this year we've been presented quite a bit of cleanups that are so entrenched and tangled up, and the firm owner's like, please just help me. And I'm like, yeah, but the, the story behind it doesn't align with the sequence of events that occurred in your practice management to what occurred at the bank. So the story behind it is—

Now, which is the— where's the moment of, you know, what are we following? What's the source of truth here? Is it the billing software? Is it the accounting software? Is it the bank? You know, what's the moment of truth here? What are we using to prove everything out?

Always the bank, Steve.

It's always the bank.

You're right.

Always the bank. I mean, that is the true source. And I don't care if the intention was X.

Exactly. The word intention. I meant to do this. It's like, but that's not what happened.

But you transfer this when you put this inside the system and you're working off of this number, but you transposed all the numbers or whatever. And it's like, oh, I did that. And then they go, you tell them to make the correction and they still make the correction wrong and they do it to something else.

And as tedious as it is, I'm one of those people that I'm so so passionate about the trust accounting that I don't like to let them do batch transfers. You know, when they're like, okay, we did our client billing and now we have it. The sum total of all these bills is $30,000. And it's like, well, I'd really like to see you do it client by client because you already got in trouble once by doing this.

You know, that's a heavy lift. If they have a lot of—

It is.

That's the problem.

Well, if there's a system in place that you create that supports what you're approving. This is why I'm saying it's really important to have another set of eyes, because you're the attorney, you're busy. The paralegal is doing everything they can to support you. They're busy. The accounting person comes in and says, hey, this is this, this is that. No one double-checked them. And the dominoes happen. Bam. And before you know it, You're just like, gobsmacked. Like, how could this happen? Well, okay, let's start at the beginning then. And ultimately what we're saying, not in a negative way, but well, to us the beginning is what'd you do at the bank level, friends?

Right.

Mm-hmm.

And then from there I gotta untether, untether, untether, and then possibly restate the things in the practice management software correctly. Don't care which one you have, make sure it's accurate. Undo, redo stuff, you're talking sometimes years of data.

Exactly. And that's the thing that's really difficult when our clients ask us to clean up their trust accounts and they're like, well, can this be done in 2 weeks or can you do it in 3 days or what? And it's like, the answer is we don't know until we get into it.

Exactly.

We don't know until we really start unraveling all this. And, you know, don't shoot the messenger here when we tell you what we find.

It's like the mechanic thing or what's the doctor thing or my tooth is broken. Well, I don't know how to fix your truth until I see it.

Yeah, right. It's time-consuming too. Like you said, so much time to figure out what happened and what's the story. Especially if there's a lot of transactions that are all the same amounts and you're trying to figure out who paid what, $810. And it's like, okay, I got to figure this out because there's multiple invoices for $810. And this is what the tech law, legal tech software says. This is what QuickBooks says, and then try to figure out like what was— whose money really came in there. And that's the, that's the part that we are experts in that I think help these attorneys with, that it's just however it came in and however you stated it, we just need to validate it and make sure it's accurate in that 3-way bank reconciliation, which I'm always astonished by a lot of attorneys that think they have a 3-way reconciliation. It's just a QuickBooks reconciliation. It's not. the same thing. It's not the same thing. And I think sometimes they think it's the same. It's not the same thing.

Oh, we had this conversation. This kind of goes towards the accounting professional, so this won't make any sense to any sort of attorney. But there's pros and cons to subledger setups versus name setups. And what I was saying earlier to Steve was sometimes you, depending on the type of practice area, Somebody else is funding the payment source for maybe 5 different matters, but it rests under a completely different name. And this same person is also the payment source for a different set. And when you start pulling reports, you get to a limitation process. And this is like an internal, um, conversation with accountants. This is something that Lynda and I stand purely in subledgers. For the simple sake of what we talked about earlier, the compliance audit and the ease of use. And others have it a different way. So as Steve and I were discussing this morning and it was like, well, the, the person, the tax individual wants it done this way. And I'm thinking, yeah, but you're at the end. You are not my true star north. I'm sorry to tell you, I do the heavy lift. I'll give you a report in the way that you want to see it, but you're not going to dictate to me the way that I'm gonna create this workflow to make this work for myself. And each person that does that type of workflow, as long as it's transparent, clear, concise, and balances to your point, Lynda Artesani, the 3-way, and you can show what's uncleared between transfers and deposits and checks and all that good stuff. Awesome. But don't kind of push onto us what is supposed to be just on the tax side, and let alone— Right. And within the group, it's a big argument within the group. It's like, it's Is it black or is it navy? I don't know. Yeah, it's just like that slight subtle.

Between that argument and should we connect the software? Should we connect Clio too? That's the other big argument that people go, "No, keep it separate. Keep the IOLTA separate." And it's like a data file. I'm like, "No, you don't need to do that." You don't.

And it just, it comes down to how you work. But also just knowing that the types of people we are and because we like the puzzle and we like the stories and we're happy to help, That's the place, the good place that we come from, as you pointed out earlier, Lynda, so.

Well, one of the things I like to recommend, it's so important at the, you know, the beginning of all of it is the bank. Like we said a while ago, that's our source of truth. The end for me is in their workflow to teach them, and this goes out to those of you that work in law firms or those of you that are servicing law firms, is that you make sure that the managing partner of the firm signs off on the bank statement and a reconciliation report that you provide each month for the trust account. And they keep it in their records and you keep it in your records so that in the event of an audit, you can say, yeah, we, we all know where the trust account is every month. We know what it's doing. That's a very good tool to use. And that really has a lot of impact in the event of an audit.

You can do it in a digital way as well, right?

Yes, absolutely.

You're talking about the paper way. There's the digital way. There's ways to ensure that those details— and that's why we like the subledger system, because at that time, at the end of period, because it's not uncommon to have to go back and undo and restate billings based on a current today conversation that's happening maybe in the trial or the case or the moment in time.

I have one more question. One more question. Yeah, I want to throw it out to you too. Okay. So I'm a personal injury attorney and I know that a settlement's coming. I know it's coming, but it's not here yet. And my client is just so desperate for money. Can I loan them some money?

Lynda Artesani.

They usually do. They usually do. They do. And they shouldn't, but they do. It's really up to their agreement, going right back to their agreement again. And then the bar rules, actually bar rules, then the agreement, because you don't want to be something in your agreement that's not allowed. But we see that all the time because they're, like you said, they're dying for the money. They just need it. You know, what do you do? And a lot of times the attorneys feel bad, so they might send that money ahead of time, and that makes a whole nother fun job to kind of track. But yet it would have to be in the agreement for sure. If it's allowed.

And if it's allowed, that's the key. You really need to look at that because you're walking down a slippery slope and you're going to fall down on that slope because that's so messy. And are you really protecting the funds?

And, and if they don't win, what happens then?

Or if the check bounces in the example you gave a while ago, I've seen it where they not—

I had a, I had a client one time that he He was loaning money left and right in Cash App, Cash App, Cash App. I'm like, what's these Cash App things? Oh, these people need money. It's what if you don't win? I know they win on most of them, you know, with insurance they usually do, but I'm sure there's times when they don't and then what do you do?

Mm-hmm.

I just had to toss that one out there because we see that every once in a while.

So yeah, you know, sometimes they actually physically get loans to pay the client costs and that's a whole nother piece, but that's not handling trust funds, it's more advanced client costs, but that's always fun. Too.

But yeah, well, there's that psychology of, oh, yeah, we won, here comes $1 million. And they just— there's all that excitement and they just want to get the money to the client as fast as possible. And I kind of have to put the brakes on and say, okay, you've been doing this for 3 years, you can wait another couple of weeks. Yeah, that's the settle here.

You know, I don't want to say anything on loans because I don't have to deal with it. But Lynda Artesani—

Yeah.

And so I'm like, ah, Lynda, you know.

Oh yeah, that whole Cash App thing was like, what? But we've had it with other clients too. But yeah.

Sorry, there's a, I was trying to beat this. There's a big jet going over like a— Oh, I can't hear it. Military jets. It is so loud.

This was a good subject.

Very good.

Yeah, this was. Yeah, well, so we're firefighter, we're jets coming in and—

Oh, there you go.

Back to your books, there you go.

I love it.

Yeah.

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