Trust Compliance By State

Welcome to Accountants LawPod, where accounting professionals and law firms converge, hosted by Linda Artesani. Welcome to Accountants LawPod, where accounting professionals and law firms converge, hosted by Linda Artesani, Sarah Prevost, and Steven Libhart.

Welcome back to the podcast, everyone. I wish we could have invited you into our pre-talk because it was a little busy. That was a little kooky. We just had a little bit of fun because it's Friday and it's been a kind of a rough week. So, um, yeah, it's been a little bit of a rough— good to laugh.

Uh, what you want to call this? Crunchy week? I feel like it's just every time I see a client, it's a little bit crunchy. Yeah, not in a— not in a negative way for them. It's just the, the work product Has been a bit—

well, you know, with what's going on in our country right now, I think everybody's so on edge. Have you noticed? I mean, because client moods kind of ebb and flow through the news cycles, too. I've noticed that.

So I just had this conversation with someone this morning. Same thing. I'm like, you know, it's kind of like you just don't— this is why people don't watch the news, because it's too much anxiety around it. I don't need layers of anxiety on my life. Give me something simple and dumb to watch. And at the end of the day, when I just kind of want to wipe my brain, because we live in our brain so much, I think, with our job and trying to manage everything.

You're right, Linda. You're right.

Yeah. So much. I just want to watch something stupid and laugh like we just did. So now on to the heavy topic of trust compliance.

Let's switch gears. How's that for a segue? 6 years ago, right?

And wait, there's more.

Wait, I just did a topic with payroll compliance. Now we're doing this. This is wonderful. I know, right? Exactly.

In two weeks, like heavy. But you did very well. I heard through the rumor mill that you did really well, that everybody was super impressed. I'm like, of course they are. It's Sarah.

Oh, that's very sweet of you, Linda. Thank you. I tried to enjoy the conversation, enjoy the moment with. my colleagues that were up there on that panel. But also, there were some funny moments, I have to tell you. So—

I wish the girls recorded it for me, but none of them did. They were too busy having a good time while our staff went. I was like, can somebody please— I thought at least Nicole would have recorded it for me, but she didn't.

I thought Myrna did. Maybe Myrna.

I don't know. Myrna seemed to be the photographer of the group, which is kind of cool.

She loves to do that.

Yeah, she does a good job. And she did a good job. I saw a picture of everybody except you weren't in the picture.

So anyways, yeah, it was good times. But okay, so we're talking about compliance in different states per state.

So we can start out because I've got a map and Tira will link the map. It's a really cool map from my case that has all the links to each state. Has a bar association link that takes you to the part about the trust compliance, and every state has what you have to work to as a legal bookkeeper. And I think that if you get a client, a lot of us are cloud accountants. We work in different states. So if you get a client, it's in a state that you're not familiar with, you should definitely hop in, go to that state, take a look and review the bar rules because they're not— it's not one American Bar Association everybody in the United States has to go by. It's different states where you are, Sarah. It even goes to a county level.

So, yeah, certain things that are county jurisdictional.

Yep. You have to know your rules. In Florida, for example, where I'm from, you have to have a copy of front and back of any money that comes into the trust account. So money coming in, you need to show who it belongs to, and you need to show the check, copy of the check image. So if you don't have those check images, you better make sure you take a picture. But they want to see the back as well. So you need that if you're going to be— if you get audited, they're going to ask for that. So you should darn well make sure that that's part of your workflow if you work with any attorneys in Florida, that you have that.

Can I ask you, law firm, why do you think that is, Linda? Why do you think they want— is it because of the endorsement?

I'm thinking somebody screwed up. I don't know if you ever go— the other thing, if you're a legal bookkeeper, just Google, like, Anybody who's had a bar violation, because those are really interesting stories that you can kind of pull up.

They are interesting. Yeah.

And see what people have done. It's kind of— it's interesting to see what people come up with for ways of like kind of messing with the system and how— what happened to them after that they got caught. And knowing that this exists, so, you know, you don't want to have your blinders on.

Well, you know, one thought that comes to my mind to your question, Sarah, about why front and back is probably for fraud purposes when a bookkeeper steals from their employer and they want to see who cashed the checks and those sort of things.

We've run into that. That's what I was thinking.

Yeah.

You know what's funny is on the endorsements, sometimes you don't even have to do them depending on the type of— they could be a machine, right? But yeah, that's interesting. That's a valid, valid point. I was just always curious.

Yeah, it had to be somebody. Just like with my leases, my lease became 20 pages, and the whole paragraph about what you should and shouldn't do as a tenant, that all grew out of things that people did, unfortunately.

But hey, you know what today is too, just FYI? The Olympics are starting today.

I know. I saw Paris.

I know. I can't wait to watch it. But sorry to squirrel on you all, but I just realized, I'm like, oh, It's a monumental day. So cool. Yeah.

So, um, I don't know, what about Oregon, Sarah? Is there anything special in Oregon that you would need to know that's different than the norm? Any special rules other than, I mean, by county, or you have a county?

Some counties, certain counties have a retention of data that you must keep longer. Not every county is like that. You know, interesting with Oregon, you— they do want an Oregon-based state trust account. There's Montana is another one that's like that. It specifically calls out in the bar rules they want a Montana, even though you might be, let's say, based in a different state. you're doing business with trust money in that state, they want the trust account to be held with a Montana state opening of a bank account. So some states are like that. I do find it interesting when you learn of a client that may or may not need to do that, which is interesting. I, I'm like, how do you— How do you hold trust funds then? It's very— but again, it takes us back to what you were saying at the beginning. You have to look at the— you have to investigate yourself, or at least— that's— we're not saying study the whole thing, but become aware with what is happening in that state as well. As they always— they all work to the ABA too. Right, right. Yeah.

And if you go into any of these states that are— any states that are on this map, they all kind of follow a format. Some of them, though, it's kind of funny, and it tells you how states are run. Some of them look like they typed in 1985, and some of them are really flashy and pretty. I think California's has been just updated, and it, it's so more modern and online. Florida too, the bigger states. But if you pick a— I just picked Nevada as one, which— And we can all take turns picking. But the first page of Nevada says the importance of trust accounting. If you died suddenly, would your clients or the executors who have to answer to your clients be able to tell how much money is in your various professional accounts that belong to each client? And that's the first, first point. So trying to let you know the importance of it. And it says that the essence of client trust accounting is contained in these 3 words: client. So the duties that arise in the context of the attorney-client relationship. Trust, the willingness of people to trust a complete stranger with their money. Just because you're the stranger, the stranger is an attorney, doesn't mean that they can be trusted. And accounting. So accounting is you have to fulfill the client's need to track that money. So if you think of it in respect to the money is held in trust, right? We're trusting, entrusting the money with somebody to hold a separate bank account. But also think of it as As the attorney, you're holding that money, but it's not yours. It's always not yours till you've earned it. And then that becomes the event that triggers the movement of the money, which has to be done in a specific way, dated. There's a lot of pieces to make sure that this compliance happens in your record keeping, whether it's in a spreadsheet. I hope not. Whether it's in a program, you know, QuickBooks, Clio, LeanLaw, MyCase, you name it, there's a million of them. As long as you're keeping good records, but you need to know to the penny what's in there. So how about you, Steve? What about—

I know Steve lives in the holier-than-thou state of all attorneys.

I was going to pick Micronesia.

Could you talk about But actually, before you pick a state, you're funny, could you discuss your state? I mean, you are—

Yes, you know yours.

Teaches on this, obviously. So in your state, could you talk a little bit? I mean, ours, like I was saying, Oregon is—

Well, you know, I think we're really blessed here. We're so blessed here in Colorado because our Attorney Regulation Council, which oversees trust money, works so closely with the Colorado Legal Trust Account Fund. and with the Bar Association, we all know each other and we all get along so well that it's, you know, you almost have to be living in a closet, a dark closet somewhere, not to be involved in the trust accounting requirements in this state if you're an attorney. And there's, you know, the bar is huge on the, on the classes. As an example, I'm teaching in mid-August.

Oh, wow.

I'm teaching to the newbies on collecting accounts receivable and We're going to be talking about trust requirements and when to get a retainer and when maybe not to get a retainer and how to trust a client and all that sort of stuff. And they sandwich me in between the trust teachers from Attorney Regulation Council. So we really have a really cool setup here. And they also work really hard on recommending their top-tier banks that can handle trust accounting and guiding the attorneys Towards those banks. I love that, and I love how they share—they openly share the information where trust interest goes in this state, which it does pretty much the same in every state. But I just love how open they are about it and how they share those numbers that you know Conejos County in southwestern Colorado got this much money, and you know Denver County got this much money, and so on from trust interest and what they do with it. It's just really cool. And they share stories about people who have used that money. I really like that.

And don't you have like a cool acronym for your, your trust bar? Doesn't have like a little acronym? COLTAF. COLTAF.

C-O-L-T-A-F. Colorado Legal Trust Account Fund. Really cool. Really cool organization. You know, our rules aren't that much different than other states. I was just looking at— excuse me— Texas while you guys were We're talking. And there's a great example of what it looked like. It was typed in 1985. And they're giving, they're giving credit to the Washington State Bar for sharing pictures. So take a look at that.

Whoa, whoa, whoa. Hold up.

Let me go pull up Texas. You guys, this is funny.

You know what?

We—

is there a big state with a lot of attorneys? Now, I think in that state, correct me if I'm wrong, but I think in that state they can actually pay for client expenses directly out of trust. They actually have the ability to do that in Texas.

I think so. And we can here as well.

If not every state lets you do that, you have to go to the page.

Yeah. What page are you on that you see?

It was right on the opening. Let me go in there. It was at the top of the document, right underneath State Bar of Texas.

Oh, wow.

If you're listening on the podcast, you might want to look for that link and then get to play along. It's funny, though. They didn't even get their own pictures. They just copied pictures from Washington.

You know, it's funny. Oregon and Washington definitely have— yeah, we're kind of, I feel like, in tandem with the sister state of Colorado, really, in a lot of ways, the way we—

Yeah, in a lot of ways.

Traction. Yeah.

What about California, Linda? I mean, oh my gosh.

That's actually a beautiful document. It's very modern. But I'm actually— I pulled up Indiana, which looks like I may have typed it back in 1982. But it does say—

I pulled up a different one.

It's a different one, but it's definitely— and I kind of thought maybe a Midwestern smaller state, not as many people.

This looks like ours in Colorado, actually.

This one says every lawyer admitted to practice in the state shall annually certify to this court pursuant to— and it gives the law— that all client funds which are nominal in the amount or to be held for a short period of time by the lawyer or the lawyer's law firm, that they should not earn income, that they could not earn income for this client in excess of the cost incurred. This was definitely written by a lawyer. To secure such income are held in an IOLTA account. So it says that they're saying they have to do something once a year over in Texas— I mean, Indiana. So it's interesting.

Well, that's what most states They do have that requirement that you adhere.

And you have to take your CLEs on it.

Yeah. So I pulled Nebraska. That looks definitely more modern day.

So some of them have updated. I mean, they're not just a PDF.

Yeah. So this one's California. A lawyer who is associated with the law firm, which purpose— for the purpose of this rule shall include the firms that operate as Limited liability professional organizations, a partnership, professional service corp, or a nonprofit legal service organization shall be considered to have and maintain a trust account if his or her law firm maintains a trust account as specified. And they've got a ruling. So it does say, and, and we have found some states, I think New York's one, depending on the type of billing. You— there are things that you do differently. So it depends on the state and it depends on the style of law firm billing that you do. You have exemptions that you can choose to have a trust or not.

Different, right, Sarah? New York is called IOLA, I think, right?

Most call it IOLA, O-I-O-L-A, versus how we often refer to as IOLTA.

Which is something you should know if you start to work with lawyers. Right. That's another little tip.

Yeah. Good point, Linda. So if you have an attorney in another state and it's IOLI, we need to speak their language. And so if we say IOLTA, they might go, well, what's that? I think that's—

Me too.

I'm glad you brought that up.

First time I heard an attorney say IOLI, I was like, oh, they don't know how to say the word IOLTA. And it wasn't that. It's an IOLI account. I thought they were mispronouncing it, but yeah. And there's rules around— we work with a lot of immigration firms and a lot of the immigration lawyers, because of the way they do their work, they don't have to— they're kind of exempt from having to move the money through trust because they're actually collecting over time and they're doing the work. And it's really a timing thing with trust accounting. So the person comes in and they get the deposit upfront because the attorney's done no work on the job. And then as they start to do the work, the money moves across to the law firm as they've earned So in working with immigration firms, a lot of times it's like a flat fee and they do it in a different way. They don't have to really deal with trust on a lot of them. Not all, though. Some states have to. So it depends on the state there as well. You can find something good.

So I'm cracking up. Steve, go pick on Georgia.

I was just picking on New Mexico. They have an interesting one where— and I'll go to Georgia here in a second. New Mexico has one where it says the money has to be deposited in New Mexico except You could have a large amount, whatever that is defined as. And if it's, if it's a large amount, it can be positive in another jurisdiction. So then I go, okay, well, what's another jurisdiction? So, okay, we're going to Georgia. Let's go look at Georgia. What are we doing?

That cracks me up.

Okay, I'm there.

404, baby.

Ha! Page not found.

Oh, go to Florida. Florida is the same way. You had a 404. So I'm on— which state did I pick?

But Georgia, though, Linda, to go to that for a minute. Georgia, I feel like that was the one where we were a little caught off guard or surprised at some of the guidance around trust because it was that or Alabama. One of those 2 states had a very Interesting way of handling trust accounts that were not the same that we're normally trained in. Yeah, I think it was one of those, one of the southern ones.

Yeah, I'm actually in Arkansas right now. I picked Arkansas because it's a state— I don't even think I know anybody from Arkansas, but it talks— this one specifically speaks to FDIC-insured interest-bearing checking account. So another important piece because they can't just Attorneys can't just say, oh, I'm working with, you know, some random bank down the street and they want to open up a trust account. Well, they are not— they have to be a bar-approved bank. So that's another piece that you should know about. If the attorney wants to change banks, they don't just get to pick. They have to pick from one that's approved by the bar. They can't just pick a banking bank account and call it a trust account, right, Sarah? You can't just pick a money market. Oh, that's a question now.

Well, here's what's funny. As you're saying that, I'm just kind of smiling because I did go to Alabama and I went to the About Trust and clearly states inside the paragraph, attorneys in Alabama sometimes use the terms attorney's trust account and attorney's escrow account interchangeably, but trust account is preferred because escrow has a specific meaning related to real estate practice. And its use may cause the account to be confused with the accounts that can legally be set up by real estate agents and other professionals. So it's literally calling out what the attorneys do.

That's true. And this one also says that debit cards and credit cards— attorneys are strongly cautioned against having a debit or an ATM card linked to their trust account, ILTA account, because of the potential for client funds to be diverted If the debit card is lost, stolen, or misused. So that's language of their, their trust agreement.

Here's one in Alaska. There's a huge Bank of America grant to their IALTA trust fund based on a historic litigation settlement that resulted in the formulation of a new grant opportunity. So the foundation there is accepting applications from Alaska-based civil legal service providers. That serve low-income and underrepresented Alaskan residents in the areas of foreclosure prevention. And Bank of America had to put up $1,200,000 to that grant. Very interesting. Now, have you ever seen that?

No.

No. That's fascinating. That's an interesting one. Okay, so I was going to ask both of you, I also, as I started learning the question, um, came through quite a bit of different firms that had the adage of your trust account's held in one bank account, one financial institution, and your operating is held in a different one, so as to not confuse—

Different banks. Those two.

Different banks. Yeah, which honestly does make sense. Obviously there's ease of use depending on the type of bank. The bigger ones you can transfer between banks External, internal. But then again, we go back to our methods that we've talked about previously where you really can't pool that, or you have descriptions on what is inside a batch movement of money, just like writing a physical check. But I don't know, have you had that experience, either one of you, as far as clients doing that?

No, they've always been the same. Interesting. Yeah. You know, look at—

I do, you know, I—

go ahead. I looked at Hawaii's because you went to Alaska, and it's only 4 pages long. Really? You want to be an attorney, go there. With many rules. It's a short doc. It's a very short document, and it just kind of speaks to what a trust account is, and that's it. It's very— not a lot of rules. At least they're not on that link. Yeah, very interesting. Maybe there's not a lot of lawyers in Hawaii. Everybody's happy there. It is.

What were you going to say, Steve?

I was going to say, you know, with using the same bank, you just teach them to use different colored checks. Oh, yeah. On the checks to say the type of account it is, all that sort of stuff. And then anymore, everything's so electronic that Well, and we see this a lot.

I, I, we've talked about this is how clients are getting their money in. I mean, yes, it's a, if it's, if it's a wire, okay, but do you protect the actual trust account before you have people just willy-nilly wiring money in?

Well, that's a good point. Yeah, I saw this in the corporate, the corporate law practice environment. When we really started going out on the cloud and stopped using checks, fraud went up exponentially because there were places from China contacting attorneys saying, hey, we want to hire you. We're going to wire you the money for the retainer, and then you send this much to this co-counsel attorney over here, and blah, blah, blah. And it was all fraud. And so you've really got to be careful.

Well, they teach to that too. been on a few sessions here in Oregon and they teach to these style scams. They talk about it on the national level, um, because it's happened in different states, like a, like a fraudulent money order or a cashier's check, which we've had what I call rubber checks of cashier's money orders come through and they look legit. They're not.

Which is in most of these documents except for one because it's too short, but it's in most of the documents. So I think that you'll find that as you go through some of these. And I actually pulled up the West Virginia State Bar, and I expected that to be a very antiquated typed-in document. It's actually a pretty flashy website. So, which is interesting, right? You wouldn't think that with such a teeny tiny state. But yeah, it's got a whole thing on the bar rules. Here's the Rule 10.

Well, clearly we're passionate about— we're like popcorning all over this thing.

I know. It's interesting, right?

It is. It is. And it's nice that this is available to us.

It's a great tool. It's a great resource. And I think too, as far as this goes, like, you have to know the rules, especially like you work with an attorney. What if that happens where a client's money, the check bounces? God forbid, what happens if the attorney bounces his trust account? What happens there? That triggers an audit. So you really want to know what these rules are so that if you do end up having some kind of an audit, You know how to— you want the records to be in place for the audit because they don't give you a lot of time to get all those documents in place. And if yours are a mess, they don't have a lot of patience for a mess because the attorneys know the rules. I have a feeling they learned that in law school. That's probably pounded home, you know.

And here's what's crazy. Pick on North Dakota. It says January 1993.

The documents from June 1993?

Yeah, I probably just need to go to the North Dakota website because I— man, that's not— that one caught me off guard.

It's not been updated.

That was interesting. Okay, let me go look. I just can't imagine that's accurate.

How about this though? In West Virginia, here's the exemptions from the IOLTA program, and it goes through the nature of the attorney's The attorney or law firm's practice is such that the attorney or law firm never receives, never receives client funds. And then the second exemption is the attorney is a full-time judge, government attorney, military attorney, or active non-practicing attorney, or an inactive attorney exempt from the IOLTA program.

Interesting. Okay, so I'll report back. I went to North Dakota State website, I clicked on the trust thing, and it is the same document. Published in January 1993.

Wow. There's also a huge paragraph in here about disposition of IOLTA funds when the owners can't be located or cannot be identified. Oh, so if you're attorneys and you're going through their books and you see this long list of $0.35, $1.50, and looking at this and they're like, yeah, I sent the check, or even, even it's a lot of money and they sent the check and it's not clearing the bank. There is a specific set of rules that you, as the person who's in charge of these funds, the attorney, they have to follow a procedure to return the funds to the state so that they can put them in the unclaimed money account and the unclaimed fund account, and then they can try to track it to the person.

We have that here in Colorado as well.

Wow.

And that's interesting because we've had it happen with an attorney where We were part of that whole thing. They had, they had moved all the money prior to us coming in, but then all of a sudden some of those checks got cashed from 5-year-old checks, 4-year-old checks that we had gotten off the books because that money was shipped off to the state. What a mess.

How does that even happen though? I mean, if you think about it right now, you walk in with a check and it doesn't It's that old. Oftentimes you're getting charged the check and the check fee for the return of the check because it's that old. I'm like, how does that happen?

If it's a trust check, do you think that the bank just honors it because it's a trust check?

Or if I know, that's why it shouldn't happen.

But we saw it happen multiple times to that client where bigger checks, thousands of dollars got cashed, and then the money was up in the state, and then the money was taken out for the state. So It was just awful for them. And it's something I think you have to kind of stay on top of. But even if you go to the bank and say, look, I'm voiding this check, I want to stop payment on this check. As we know, what does the bank tell us about stop payments? They're good for what, 6 months or something? And then it's fair game to anybody.

Well, and as you guys know, from December to— I think it was about February of this year, we had 3 of our clients pass away. Not a good situation at all. And we got very deeply involved with the state funds program with all of the things that were in their trust account because they had things like that. You know, there was $4 left and they were sitting on it for 10 years and, you know, stuff like that, which they shouldn't have been because we advised them that they needed to turn it over. But once they passed away, we had to take care of all of that. And that was quite a learning experience.

Okay, so what you want to be an attorney in Oklahoma, forget Hawaii, Oklahoma, it's 1, 2, and a little bit of a 3rd page. That's it. That's it. It's called Trust Accounting 101 Frequently Asked Questions. So it—

Is it shorter than Hawaii?

It's shorter than Hawaii's, and it was written by Travis Pickens. Doesn't have a date on here, but it's literally just what you do if, if you're doing trust accounting.

It's not Just go to the Oklahoma State Bar and see what comes up.

That's the one I'm on. I'd be curious. It's very—

To their actual website.

Oh, their website. Yeah, because this link doesn't really tell you anything. It's just a frequently asked.

I wonder if it's dependent. Sometimes I wonder if some states do it this way. So you are required to be registered, to take the courses, to make sure you get really familiar with the state's listserv and all of those things that they have going on.

Well, and you know, what you're saying, Brings me— brings a question to my mind for those attorneys that are listening or watching this podcast and the accountants out there. This particular map that we're working with today is a conglomeration from all the different states, but I wouldn't use it as the rulebook.

No, I would go to the bar.

I would go directly to the bar wherever the jurisdiction is. If you've got a specific question and research right on their site and talk to their people.

Yeah.

So you wouldn't use AI and ask the question or just—

Oh yeah, sure, sure. AI says that you get to keep the money and charge your client more.

So yeah, you're right, Steve, because that, like, that little thing from Oklahoma, maybe that's all the person that was making the map could find. But I clicked on Rhode Island, smallest state in the union, and it actually brought them— brought you right to the Bar Association page.

Well, yeah, like, I tried to click on DC on this map and couldn't get it.

Yeah. Yeah.

So, you know, this— I wouldn't use this as the end-all, but I would use it as a good resource for the basics in each state.

Really good point. I mean, I do appreciate if states could just publish it in a way that a client and the attorney— so we all have the understanding of the ground rules. So it's written in a way that's consumer You know, read as well as attorney-led.

Well, and I think probably that sometimes grievances happen, to your point, Sarah, because people don't understand the regulation, and maybe a client would grieve an attorney needlessly because they aren't translating the information properly. You're right. You're right.

Yeah, it would be nice. Now, with the overarching ABA, American Bar. Let's see. They've got— what do they have on here? Let's see.

And you think about it too, when it speaks to someone paying a retainer request by a credit card, where does that money— where does the fee go? And that's the whole thing. The fee is part of the law firm expense, not ever coming out of that. client paying it unless you have that agreement and arrangement and it's legal and use confido and you have it set up where that comes out of the client, client pays that fee and it comes into operating because it's not part of trust.

Well, go ahead.

It's also— oh, sorry, Steve.

No, that's all right.

So what you're saying is legal. It's not just under the jurisdiction of the way that you could do it as a bar. You have to see if the state requirements— there's a dual jurisdictional thing on this.

If you're trying to get paid back for that. Yes. Yes. Because some states don't allow that.

I think some states do not allow you to charge the interest or a flat fee or the— Well, and I'll tell you, the name, I wholeheartedly—

I'm one of those people who tells attorneys, do not do that. Do not charge your clients for credit card fees. That just, you know, there's this thought out there that attorneys charge so much anyway for the work that they do, and they're professionals. They've paid to go to school for this. They deserve their fees. But I feel like when we add a credit card fee on, when we ding a client for another $30 or whatever, that's kind of like rubbing salt in the wound. If you're going to— if you're going to do that, when you build your estimate, when you build your budget for this particular case, Linda comes to me and hires me to do her slip and fall accident in the grocery store, and let's say I need to get a retainer or whatever for all the client costs and all those sorts of things. To charge her another $25 or $30 for credit card fee is an insult.

I think I agree with you, but a lot of attorneys don't want to pay merchant account fees.

But let's look at it this way and you guys tell me what you think. That goes on their, their, their profit and loss report as a bank expense and it reduces their taxable income. You know, it's just another one of those things that reduces taxable income, right or wrong. You know, that's what it does.

Yeah.

And when you're doing your budget for the case, if you, if you're hell-bent on that $35, then build it into your fee. Just build it in there. Don't tell the client.

I agree, because it does make you look cheap. And I mean, a lot of them do it. I mean, they get—

Devil's advocate the other way. Attorney, law firm owner, how are you paying for other services? You want your mileage. You want to pay with your credit card. And what is our everyday system like? We go to the grocery store, we do whatever we want. We're not getting—

Credit card doesn't hurt as much.

It's inflated. Yeah. The prices are inflated inside the products.

Yeah. And we're asking about it too. If you're someone getting a divorce, they might not have cash to do that.

Right.

Yeah.

Right. Yeah. So to me, it's nickel and diming people. Yeah. I mean, I've been to merchants before where they say, we're going to charge you a $15 credit card fee and I'll leave. I'm like, I'll go buy somewhere else. That just is an insult to me. We're not in a cash society anymore. Why are you charging me to use my debit card, which is cash?

It's a form of cash. Yeah, yeah. This is backed by Visa, and Visa is going to charge it, and that's why. And we're backed by MasterCard. But you know what's interesting? That little segue, I don't know if you all saw that about American Express has been dropped by eBay. And, um, there's another major player that it's been dropped by.

Target. Target is dropping a major— I think it's— chat, I can't remember. I saw an article the other day they were dropping some sort of method of payment.

Yeah, because of the fees, and it's an astronomical fee, which goes back to like, it's just, it's really hard because everyone is required at these larger conglomerates to report gross earnings and revenues because of stakeholders. And so it's just, uh, ultimately in the end, all these additional costs are all coming back to us in the end in some form. Right. I mean, we're just going to make up the bottom line. So all the destruction that happens in our different cities and stuff, all of those fees, that, that those are going to come through taxes just like it would through a merchant fee. But I do devil's advocate. Like, honestly, let's be fair. How are you going to pay for our services? With a credit card. So why is it not okay the other way? I mean, yeah.

So can we back up a little bit? Can, can I mention a couple bank names? Is that okay?

You sure? Yeah.

So I gave the example a while ago here in Colorado at COLTAF, at the Colorado Legal Trust Account Fund website. If you're a new attorney, you can go there and see the list of COLTAF banks in Colorado. And separate from that, they'll have the preferred banks. And Wells Fargo is one of those. Now, you guys know you work with a lot of banks and so do we. And so you get the feel for where to tell your clients to go. I love Wells Fargo for trust accounting. I really do. It's always clean. It's easy to read. It's easy to reconcile. It works. I don't see a lot of problems, except they continually goof up and charge the credit card fees or wire fees in the trust account instead of in the operating account.

Most of them do, though.

Most of them do. You're right.

Most of them charge for checks. I mean, unfortunately, our attorneys have to live in a world of checks because they— if they have to return a return, To send it in a check. They can't— I don't think they can do it electronically. They have to have that check trail, I guess. And most of them still use checks for the other side of things too. They live in a kind of a stuck-in-the-old-fashioned-check world.

We have—

well, I think there's a lot of fear there of using electronic payments when you're dealing with trust money.

And especially if you're— it might not be allowed. It might not be allowed too. So who knows? But I mean, they should think about maybe doing it. The bar should. allowing for it. And maybe it's a fact that they don't have the paper trail. I don't know what the reasoning behind it is. I just know that with attorneys, they tend to live in a world of checks, so they don't think there's anything wrong with it. We try to divert them out of that on the operating side when it comes to paying their bills. Like, we really need to change this and not do that because it's just not as secure as electronically.

Right. Well, and it affects your cash flow.

Well, you know, Wells Fargo, like any bank, I've seen it with all of them. And Wells Fargo has had those blips.

Well, where I was going to— about Wells Fargo, where I was going to go with that is I've run into situations where I'll go ahead and contact the bank and say, hey, for our client that you've given me read-only access, so they'll talk to me. For our client, you're taking those wire fees and those, those credit card fees out of their operating account or out of their cold account, their trust account. And you shouldn't be. And they'll go, oh my God, thanks for bringing it to our attention. So that's where we can be proactive and then go back to the client and say, hey, we got this fixed for you.

Well, also, you can have— I mean, they're allowed in most states to have a little nominal amount of money in there to cover fees.

Good point. Yes.

And then you have to book that in properly. You can't just go, oh, where do I leave this? It's got to go in a place because if they're used, you need to, you know, maybe replenish them. I know Florida, $250. So You can't keep $10,000 in there, though, right? As a cushion. Sarah? Yeah, we had an attorney that kept it in as a cushion, and it was a lot.

I saw Sarah. She was like, yeah, I know who you're talking about.

So I think, though, kind of to your point, Steve, where I was going with this is that every bank is going to have a moment of oops. It doesn't matter. I swear you'll have an attorney say, I swear I made sure they weren't going to charge those checks out of there. for me to buy them, and they charged them out of there. That will happen every— I have interesting love affairs and hates with certain ones. Um, that particular bank at times has proven very challenging because of their restructuring, and we are finding that similarly every bank is going to go through this, just like every love affair and hate I have with connections within our software ledgers that we use. It's the same damn thing. I pick it on Amex because Amex really shook it up and shame on them. They really screwed that up. But every— I can't stand that banks cannot honor our seat in this. We're asking for protection and liability. All we want to do is visibly see and get the data. I should not have to bother a business owner for that.

Right.

And that seems to be problematic depending on the bank.

Right.

Which is ridiculous. So it's hard, I agree. But in the end, um, like our state, like yours, Steve, we have a listserv, we have an actual bank, um, and they have ratings, basically gold stars and certain things that they do to assist with the, the local bar and, and how the money goes. And we've had it in a state where it's a national bank and They don't put the interest on the statement, but yet they're charging it. They're putting it in the person's bank account, but they're not taking it out.

Well, how about the banks verbally on the phone? They'll take it out at the end of the month and put it back in the next month.

Oh, God love them. I hate that. Think about the rest of us.

Yeah, I have a client accounting for that. That 37 cents never got taken out of the trust account. It went in and never came out. And this is years ago. And I said, you have to go to the bank and tell them that they didn't move it out. I'm not going to waste 5 hours of my time on 37 cents. I totally get them, but it's not your money. So it just sits in the trust account, interest clearing account, just sits there, doesn't clear. At least it's identified.

It's the intention. Exactly. You know what? If something were to ever come up, it's clearly stated right there. And I don't blame them. That's kind of how I approached it.

I wouldn't want to go to the bank for 37 cents either. I mean, I don't blame them on that. And it was actually during COVID when I found that. I was like, oh, you've got this issue. I saw that we were zero, and all of a sudden it just never got taken out. And yeah, yeah, yeah, man, we could go on.

To Sarah's point, if they're audited, it's not that—

I'm sorry, go ahead. I was gonna say we could probably keep going on. We should probably let our listeners enjoy what we've given them. Yeah, let them play with the map. Yeah, play with the map and tell— yeah, please, I mean, give us feedback. Um, Let us know what you find or if something— I think, Steve, you've highlighted so many things that probably resonates with a lot of people. Tell us what you think. We want to know.

I'm this nerd. There's 2 things. There's 2 things I like in legal accounting. One is trust money and number 2 is KPIs. You know me. So this is— this nerds me out completely. I'm happy for the rest of the day.

Well, I know we did it. We did a session in the Law Lab on this and everybody was having so much fun. Oh, you know, they would say, pull up the state, pull up that state, and we would all have a big Everybody wanted to know what we could find in there, and everybody was looking as we pulled it up and reading it. And it was a fun session because of the fact that we, we had the map and we just kind of played with it because most of us do work in multi-states. And, you know, the attorneys have to work to wherever they're practicing too. So if you have an attorney that does multi-state, you have to understand.

Yeah, yeah, yeah.

Multi-bank accounts there because typically they have to have the bank account over here in Washington, but they practice in Oregon or whatever or wherever. If they're in Idaho, they all have to have all these different rules. And different states. So you have to track all that separately because you may be taxed on things separately. So your income might be taxed. So this is why you need a legal accounting team behind you, right? Flash, we'll make this a commercial. But no, so seriously, if you don't have your books in line, you're going to end up paying taxes on stuff you shouldn't be paying taxes on. This is why you need a good financial team behind you to help you that knows all this stuff that obviously, if you see it, If you are watching us on YouTube, you're going to see the excitement in our eyes as we're picking states and going through it. But it is kind of— we find it fun. So we like to follow the money, Sarah. We follow the money.

We follow the money. Okay, so I got to ask before we really say goodbye, what do y'all got going on for the weekend? Something fun?

Beach. I'm going to the beach.

Beach.

My dad's birthday party.

Oh, that's right. That's awesome. I love that.

Yeah. What about you?

Yeah. Happy birthday, Dad.

Oh, I love that. Yeah. Happy birthday, Dad. I am gonna try and get on my new bicycle. Not try. I'm gonna get on my new bicycle and take some time and ride my little bike.

You can't go on bike rides without walking with the mamas. You gotta whip those ladies into shape.

They need tricycles.

So you're gonna have to bring like a wagon behind you.

I bought an electric tricycle, Sarah.

You don't need electrical. You got to pedal, Steve. The whole point of riding the bike.

You can pedal, but it's got those assist things when you're going uphill.

Talk them into it. Talk them into it.

Okay. All right.

Yeah. So anyways, but yeah, low-key, just having fun.

We need to bring the mamas onto the podcast.

I know we should.

For all you listeners out there, Sarah, tell us who the mamas are. And do you have a picture?

Well, they're there. They're on the— when she goes like this, that's where they are.

Yeah, they're right over to her left.

Yeah. Rosette and Evelyn are their names. People always ask me when we're at conferences, what are their names? Because they're referred to as the mamas. But they're adorable. So popular. Oh my God, I love them. Precede us.

When we're at a conference where nobody goes like, where's the mamas?

Yeah, they're fantastic. I love working with my family, so it's a wonderful thing.

They're just darlings. If I could adopt those 2, I would.

I know they text you privately. It cracks me up.

They do. They send me all these little tidbits. I'm like, oh, the mamas.

Yay.

Well, tell them that I hurt my back and ask them to send me a remedy from—

Be careful what you ask for. God love it. Okay, Tiara, what you got for us, friend?

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Good topic, everybody.

Thank you, everyone.

We'll see y'all next time.

Thank you. Bye-bye.