Client Honesty and Trust Accounting Essentials

Honesty in the client-lawyer relationship

• Do not paint a rosier picture of yourself or your case than warranted; be forthcoming about weaknesses. Every case has strengths and weaknesses, and the other party may disagree.
• Open and upfront communication helps the lawyer assess accurately.

Billing structure: professional services vs disbursements

• Professional services: fees for the lawyer's work (e.g., hourly rate or flat rate).
• Disbursements: extra charges/out-of-pocket costs (e.g., postage) billed separately.
• Secretarial/administrative tasks are typically not billed as professional legal time; work at different staff levels exists (from highly experienced to junior staff).

Trust fund accounts and retainer use

• Retainer money is held in a special trust fund account, separate from the firm’s general accounts.
• Money from the retainer can only be drawn to pay bills after the firm has invoiced for work performed.

Invoicing and payment flow

• Invoicing is the trigger for applying retainer funds to unpaid bills.

Misappropriation of trust funds

• Taking money from the trust fund before invoicing is a serious offense and constitutes professional negligence (misappropriation of trust funds).