Sign Maryland Banking Separation Agreement Online

Industry sign banking maryland agreement computer

[Music] in law school our ethics professors told us not to steal from our clients and to put their money into a trust account but protecting client funds is more complicated than that meeting our ethical obligations takes more than good character it takes work if you don't know what you're doing you can quickly lose control over client funds violate the Rules of Professional Conduct and face serious sanctions we need to know how to open and I also account how to use it we must watch our withdrawals we can't rely on our memory we must maintain solid records reconcile our account every month ensure that our bank has handled the funds correctly check our checks and keep our records you'll need to open what we call an I alter account that stands for interest on lawyer trust accounts one account should be enough to hold all of your client funds you don't need to maintain a separate account for each client not every bank can open such an account you need to visit a bank that participates in the IOLTA program but even some participating banks may look puzzled when you ask to open an attorney trust account if they do take your business to someone who knows what they're doing after all you're responsible for opening the right type of account most banks waive maintenance fees when I alter accounts but since client funds may not be used to pay bad check charges fees or other incidentals the bank isn't allowed to deduct such expenses from the account itself once opened all checks and deposit slips must clearly designate the account as an attorney escrow account attorney trust account or clients funds account client funds go into your trust account your funds go into your operating account sounds simple but lawyers often cominging their clients funds with their own in a busy firm it's easy to grab the wrong deposit slip and accidentally put your own money into escrow or your clients money into your operating account keep deposit slips checks and other materials pertaining to your trust account in a separate location from those pertaining to your operating account this lessens the likelihood that you'll confuse the two when you get money you must first determine who the money belongs to complete the correct deposit slip and place it in the right account when a client pays you for services you already rendered that money belongs to you that goes into your operating account if a client is reimbursing you for expenses you already incurred for example filing fees that you advance for the client if you're getting reimbursed that's your money that goes into your operating account retainers to cover future legal fees and expenses that belongs to the client and until you've earned it it stays in IOLTA the same is true for flat fees for work that you still have to do remember fees are never earned upon receipt if you still have work to do that money belongs to your client that money goes into IOLTA settlement checks a large settlement check actually belongs to various people remember your fees will come out of that check certain medical liens have to be paid other expenses that you've advanced and the rest goes to the client but until you've identified what all those disbursements are and are ready to disperse that settlement check goes into your I alta account the same is true for disputed fees if you have a fee dispute with a client the client thinks that you've overcharged and you haven't earned certain fees and that has to all be just sorted out later well until it's sorted out by arbitration or some other method it stays in i alta at least the disputed portion stays in your i aughtta account for settlement checks say you settle Fred's accident case for $10,000 put $10,000 into escrow pay off any liens or expenses for your client take your 1/3 fee of $10,000 and recover any expenses that you've advanced and pay your client the rest once you earn your fee take your money if you let your money sit in the trust account that will amount to unlawful commingling beware of the following cash disbursements when you write checks on the trust account you must properly designate the payee so that a proper paper trail may be preserved so if you write a check payable to cash or to bearer you're breaking the law ATM withdrawals if by mistake your bank gave you an ATM card for your trust account cut it up and inform your bank that cash withdrawals or debit card payments are not allowed borrowing it's not your money so borrowing funds on a rainy day to cover firm expenses or other personal bills is theft that will cost you your license overdrafts if the disbursement would create a negative balance with regard to an individual client matter or to all client matters in the aggregate something has gone drastically wrong with your accounting even if other client funds are sufficient to cover the check you can't use one client's money on behalf of another take an account which holds a total of $30,000 in funds belonging to Moe Larry and curly if I get a $30,000 check to settle the case of another client I must wait until that check clears before I may disperse the proceeds if I disperse too early I'm using other clients money to cover disbursements in a totally different case that may prevent an overdraft but you have effectively misappropriated someone else's fun don't disturb the court or bar counsel if you overdraw your account the bank must report the efficiency to bar counsel even if the bank lets you draw an an available balance which includes checks that have yet to clear you can't draw on funds until they've been collected by the bank I'm absolutely paranoid when it comes to ensuring that checks clear before dispersing the funds unless the money is actually there you can't draw on it period when accounting for client funds the only memory you can rely on is that contained on your computer there are lots of great computer programs that will help you organize Ledger's of trust activity mine automatically updates these records whenever I write a check or make a deposit when you write a trust check these programs instantly record the client matter pay a date check number and purpose of the disbursement when you print a deposit slip these programs will keep tabs of the date and purpose of each receipt the clients names and the matters to which they pertain all of this data will instantly populate up-to-the-minute trust Ledger's client ledgers and a host of other reports that you can print at the push of a button it's much harder to do all of this by hand in this day and age handwritten Ledger's and manually written checks are unnecessary and unnecessarily risky only a legal dinosaur would keep handwritten records and if you lose track of your trust account you and your license may also face extinction you may not intend to steal from your clients but careless accounting may lead to misappropriation and harm them just as much to protect your clients you must keep two types of Ledger's the client matter ledger this shows all trust transactions on each case the overall trust ledger shows all transactions on all cases the client matter ledger this gives you a snapshot of all trust activity for a given client in a given case on April 1st victims personal insurance company sent a pip check for $1,000 for medical treatment since that's the first check received into escrow our IOLTA balance is $1,000 may fifteenth tortfeasors mutual sent a settlement check in the amount of $10,000 that increases the aisle to balance to $11,000 on May 30th we're writing our first check out of IOLTA it's to Chesapeake Cairo hackers check 123 is for $1,000 for treatment of our client that reduces the balance to $10,000 and out of that $10,000 on the same day May 30th I'm getting paid check 124 to Kramer and Connolly for $4,200 that'll account for my 1/3 fee plus all the expenses that I advance during the course of representation that reduces the balance in escrow to five thousand eight hundred dollars where does that go right into our clients pocket on May 30th we write check 125 - curly - stooge as net recovery to the client in the amount of $5,800 if we've done it right at the conclusion of this case our client mater ledger will be reduced down to zero and that's exactly what it shows here you're allowed to pull all of your clients money into one trust account but without allocating specific funds to specific clients you won't know who has what you won't know that the $10,000 check represents the gross recovery in curly de Stooges case or how PIP payments from his own insurer were allocated to medical providers this is an extremely simple auto accident case but without the right ledger you'll lose track of even the simplest case don't think you can rely on memory to keep this straight as your practice grows you'll quickly lose control of your account and won't know which funds pertain to which cases the same data on your client ledger will show up in your overall trust ledger this shows all deposits disbursements checks payees and the clients and matters to which they pertain our ledger for the month of May shows transactions for all three of our clients Moe Larry and of course curly will reconcile this report every month with our bank's account statements to catch mistakes this is one checkbook you must balance to do so you must carefully compare your bank statement with your trust ledger each and every month let's compare our trust ledger with our bank statement for the month of May wait this is showing a balance of $22,000 but our ledger only shows half of that amount we're missing $11,000 don't be alarmed your bank statement will rarely match the figures on your internal Ledger's why because the monthly bank statement won't show checks or deposits that have yet to clear to balance the two we need to make some adjustments here's how in six easy steps our checks and disbursements missing what's the total of unlisted checks and disbursements are some deposits missing what's the total of unlisted deposits add missing deposits to the banks reported balance subtract missing checks and disbursements from the banks reported balance let's take these steps together by preparing a reconciliation report our checks missing from the bank statement the bank shows only one check for May but our ledger shows four so we need to list the missing checks on our report our deposits missing from the bank statement the bank reported two deposits for the month and that matches our ledger so there are no missing deposits now we're ready to reconcile we start with the balance reported on the bank statement and adjust that balance by adding all unlisted deposits here there aren't any add we must also subtract all unclear checks since $11,000 worth of checks have yet to clear we subtract these checks from the bank's balance to get an adjusted bank balance of $11,000 if we've done it right our adjusted bank balance will equal the balance contained on our trust ledger this is what our monthly reconciliation report should look like if you complete this form each and every month you'll be reconciling your account and ensuring that all client funds are accounted for I know you just don't have the time to balance your checkbook that's fine it's your money you can rely on your bank if you wish but the funds you hold in trust don't belong to you they belong to others clients who are trusting you to protect their money so you can't leave that responsibility to your bank banks do make mistakes they aren't supposed to charge fees or to debit your clients funds to cover account expenses the printing of cheques or bad check charges but these mistakes are quite common if you don't catch these errors and overdraw the account the bank will still report the overdraft to bar counsel and trigger an audit of your entire account if you don't want bar counsel reading your account statements you must read them yourself remember it's your professional responsibility and your license you can't trust your bank with either of them there are two critical times to check your checks before you send them out and after they come back in the hectic pace of our practice we might grab the wrong checkbook pay firm expenses with the trust check or dispersed trust proceeds with a check drawn on our operating account instead we may also confuse these two accounts when depositing funds these errors may over draw our IOLTA accounts get reported to bar counsel and prompt further investigation to prevent these mistakes keep your checkbooks in different locations within your office print your trust checks in a different color and style from checks design for your business account and while this isn't always practical it would probably be a good idea to use separate banks for each account anything that makes it harder to confuse these accounts will reduce errors and inadvertent infractions later on when your bank sends you copies of canceled checks you must exercise similar vigilance in checking your checks when you get your bank statement you'll get a copy of an array of canceled checks take your time to examine them does anything seem out of place check three twenty one sticks out like a sore thumb this April first check is out of sequence it's dated earlier than the others but has a later check number in fact the signature looks fake mr. Murphy's signature on the other checks is quite different and our forger doesn't spell very well even if it were genuine it's made out to cash that's a big no-no and what about cheque 121 it looks like your signature but you're paying to press suits these aren't lawsuits this is dry-cleaning you can't pay personal expenses from client funds held in trust this is probably a mistake somebody grabbed the wrong checkbook and it came out of escrow and error you can catch these problems but only if you check your checks for items out of sequence forged signatures or checks that seem different improper endorsements unfamiliar payees checks payable to cash and your own mistakes this is an essential way to protect yourself and your clients from fraudulent transactions and other serious problems I know what you're thinking I'm a lawyer not an accountant I don't have time to do this each and every month perhaps you'd rather do it on a quarterly basis that wants a why not the rules require that you do this each and every month if you don't you're breaking the law and if bar counsel asks you for Ledger's and reconciliations that you just don't have prepare to be sanctioned for misconduct protecting your clients funds takes more than honesty it takes care in opening your eye all to account using it wisely watching our withdrawals forgetting about using our memory keeping meticulous records reconciling our account each and every month reviewing our account statements carefully checking our checks and keeping our records if you neglect these tasks you place more than your clients money at risk you'll place your license and livelihood in jeopardy [Music] you