Navigating Ethical Challenges: Essential Guidelines for Bookkeepers Working with Attorneys

This week we're going to talk about ethics in bookkeeping, especially when working with attorney clients. So as a bookkeeper, ethics plays a pivotal role, particularly because we work with attorney clients. The legal profession, for example, is not only governed by a strict code of ethics, but it also mandates confidentiality. We've all heard the term lawyer, client confidentiality or, you know, lawyer-client privilege. That's part of what they do. And it really— the Code of Ethics with attorneys mandates confidentiality, integrity, and professionalism. And as bookkeepers, we should adhere to the same Code of Ethics and make sure that we understand that these are ethical standards and it's essential for fostering trust with our clients and also to ensure compliance. So there's a lot there. We need to make sure that confidentiality is paramount, and that's the number one tip, is to make sure it's paramount. It's one of the foundational ethical principles in both bookkeeping and law. So confidentiality is critical. Attorneys are bound by that attorney-client privilege. It protects the confidentiality of communications between them and the clients. And let's face it, when sometimes we're in Clio, we can see a lot of the back and forth. We can see the letters. Sometimes we have to dig into the data, find out what actually the, you know, the file is about. And we see data and we cannot break that confidentiality. We have to keep that close to the vest and make sure that we adhere to that. It's critical to implement stringent measures with your staff and your team to protect the client's information. And we have to make sure that we have a place to securely store the data. Clio's a perfect example of storing the data. Or if you're using like Microsoft, There's ways of doing that as well if you're using a different software like LeanLaw, for example. Making sure that our communication with the client is encrypted. We want to make sure that we are using a platform. We use Licio at our firm to manage our engagement with the clients so that there's no data flowing back and forth that should not be able to be seen by people who don't have access to it. So we need to have strict communication channels and restrict the access to financial records. We don't want employees seeing the financial records of our clients. So we want to make sure that we don't breach confidentiality rules because it could damage not only our repu— reputation, but could have some ramifications as well. So the other piece is integrity and accuracy in financial reporting. As Sarah will say, my favorite line is garbage in, garbage out. We sometimes get clients that have a big mess, and they're like, can we see the metrics? Can we see the KPIs? And it's like, you have to make sure that that data is beautifully clean in order to be able to give them the right metrics. So bookkeepers must maintain the highest level of integrity in their work, and it includes providing accurate and truthful financial records, ensuring that all the transactions are recorded correctly, and adhering to the ethical accounting practices. So think about that for a moment. Ethical accounting practices. Sometimes our clients will push the boundaries of that. And we have to push back. We have to tell them and provide them code of the IRS. So go to irs.gov, find that section, and say, this is why you have to do it this way. And we just have to do that, even though they're professionals. Sometimes you have to give them the data black and white. They're very— live in a very much black and white world like we do, not many gray areas. So we have to make sure that they understand that. And by our maintaining the accounting records, we're being as transparent as possible about any discrepancies which could land in the trust. We might see discrepancies in the trust account and we have to be fully transparent when we communicate that with the client. We have to show that we're credible and that we have very good communication with our clients so they can understand that this is what we're seeing and this is what we need to do to take action to fix it and to correct it. And that might mean them moving money from operating to trust or vice versa. I've seen it the other way around too, where the attorney has earned the funds, created the invoice, applied the payments, and not moved the funds into operating. And that's just as big a no-no as not, you know, it's not as big a no-no as using the funds for other purposes, but it's still a really bad practice. And you, and the IRS does not want to see that you're hiding funds and hiding income from the firm. You need to understand legal context. So working with attorney clients requires a solid understanding of legal context within which they operate. So As a bookkeeper, you should familiarize yourself with specific regulations and ethical guidelines that pertain to the legal profession, including the Bar Association. And you know, we've talked about this in the past. Look up the Bar's rules, look at the Model Rules for Professional Conduct. This knowledge is just going to enhance your ability to work with your client and to be able to serve them effectively. You don't want to be sitting there someday in a bar audit saying, oh, I didn't know this was part of the rules for your state that you practice law. Very, very important. Important. We need to avoid conflicts of interest. So any conflicts of interest, just like they do their conflict checks, any conflicts of interest that arise as a bookkeeper that has multiple clients in the same legal field or any personal relationships could compromise your professional judgment. So it's essential for bookkeepers to identify and disclose any potential conflicts to their attorney clients. This doesn't happen so much, but it may happen, especially if you're working as a referral and you're in a small town. Establish clear boundaries and maintain transparency. It's a repetitive piece of this video, but it's so true. And make sure that there's no, you know, try to prevent any ethical dilemmas that may foster any break in the professional relationship. And of course, billing practices. So ethical billing practices, which I kind of just mentioned above. Are important with the attorney-client relationship. We have actually had to fire a client that just wouldn't adhere to those ethical, ethical practices. We were very transparent to ensure the billing was clear and accurate and that we justified what was happening in the file. You know, always follow the money, follow what happened at the bank, and make sure that you're showing the client. For example, maybe they took some funds out of the trust account to pay for wire fees or— even a check order. And if you don't tell the client that they're sitting there and they haven't the funds in there to cover that, then they're using the client funds. And that's a break in that— truly a break in that billing practice. And you have to ensure that they understand where— what's there, where it stands, and if they need to reimburse the trust fund. It's, it's really important. And then make sure that you follow the rules and regulations and the ethical standards. And Keep an eye on that bar association rule for your clients. They can change. We just recently had a change in California that was pretty big. So stay on top of those changes. We have a map that we use. It was provided by MyCase. I'll add a link to that in the article as well where you can get a link to all of the different bar rules, especially if you're a cloud accountant and you work all over the country. You want to make sure that you stay on top of those things. If you can get on the mailing list, you can actually become a member of that local bar as a non-lawyer. So that's something you might want to engage in and look at. It's also a great marketing tip if you want to end up teaching the lawyers at the firm how to do some of the, the bookkeeping tasks that we generally take care of, but it might even get you clients. So ethics in bookkeeping, especially when working with attorney clients, is not just about adhering to the rules. It's about a good strong relationship with your attorney. So prioritize confidentiality and put that right at the top of the list. Prioritize professionalism. This is why we chose this particular industry is we want to show that we're very professional and that we have an ethical responsibility. And if you uphold those values, you'll not only protect the interests of the clients, but also your attorney-client as well, and as— and their reputation too. So it's important as a whole. So look at this as a way for you to step forward in your professional career, to prove to everyone that you know what you're doing, and that this is just one big step towards being the utmost professional when working with attorney-client. I hope that's helpful, and we'll see you all next week. Don't forget to gimme a like. Thank you.