Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

What Can Unbalance a Trust Account?

22 Aug 2023 · 2 min

Watch on YouTube

1:41

In this segment of the YouTube video "What Can Unbalance a Trust Account?" Lynda Artesani moderates a discussion among legal professionals about frequent mistakes that cause trust‑account imbalances. The speakers enumerate several specific issues: wire and bank fees that are inadvertently charged to the IOLTA trust, check‑order errors including transposed amounts (e.g., a $732.03 check cashed as $3,203), failure to post checks promptly (especially among real‑estate attorneys), and the common practice of mistakenly depositing client retainers into operating accounts instead of the trust account. The conversation emphasizes the need for daily reconciliation and vigilant monitoring to catch these errors early, highlighting that while some errors stem from human oversight, system validations can help prevent them.

Steve, actually, you tell me, what are the things that happen? What's the common things that happen that throw the trust off balance?
Oh my gosh, there's so many.
So wire fees, right? Wire fees coming out of IOLTA or trust. Bank fees.
Bank fees.
A check order.
A check order. Wrong amounts. We had one just this morning. I was working on a trust account. The check was for $732.03. And the bank cashed it for $3,203.
Yeah, we were talking about earlier, right? The transposing of number. I mean, people make mistakes. It's not a robot itself. There are validations behind it.
Or this happens so often with trust accounts, especially I see this with real estate attorneys where they will write a check and they'll forget to post it.
Yeah.
You know, and they're like, well, you know, I did what I needed to do. I thought it would catch up at the other end. It's like, no, no, we've got to post this because we're keeping track of your trust account, you know, a lot of them on a daily basis. We'll sweep through and look at them every day, you know.
How about when an attorney deposits the retainer into the operating—
Into the operating account? Yeah.
That one happens a lot.
Or, or this is— or the bank does it. Well, because like certain platforms that you use to collect money, if it's in a form of ACH or credit card, doesn't really help the person understand the discernment. So they just pay it in whatever they think it is when they realize there's 2 tabs on that screen, or they didn't pick the right tab, you know, because it does have 2 tabs. One is if you're paying an invoice, one is if you're paying a retainer. Translation, retainer. Sometimes people just— they know what a retainer is, but you get lost when you're paying a bill, I guess, or when you're paying a bill and a retainer.