Learn Trust Account Management
One of the first things that new lawyers need to do is read the rules and ethical opinions issued by their state bar concerning trust account management. Many outstanding lawyers have been suspended or disbarred solely because of the mistakes they made with their trust accounts. Understand that this is not just a minor issue. Few things will get you sanctioned by the bar faster than mishandling your trust account. Some of the details vary from state to state, but following these basic rules will keep you out of trouble.
Fees Are Not Earned Until You’ve Actually Earned Them
Don’t take a client’s money out of your trust account until you actually have the right to do so. Whether you have the right to the funds can vary according to the terms of your fee agreement, the nature of the work, the length and status of the project, and the rules of your state bar association. Don’t work in gray areas when it comes to your trust account. Determine when you are entitled to bill against the trust account and then do so at the appropriate time.
Don’t Borrow Funds from Your Trust Account, Even If You Plan to Put Them Back Later
Borrowing money from your trust account is not the way to fix cash flow problems. While you may have the best of intentions, your state bar will likely consider it to be theft or at least to be irresponsible trust account management.
Don’t Steal Trust Account Funds
This may seem so obvious that it wouldn’t need to be mentioned. However, the unfortunate reality is that many lawyers have looted client trust accounts, sometimes for millions of dollars, before being caught. Often it is the result of an attorney developing a substance abuse problem or a gambling addiction. Other times it is driven by pure greed and a willingness to exploit people. Don’t end your legal career by going to prison.
Don’t Allow Non-Lawyer Employees to Have Check-Writing Authority on Your Trust Account
Many good lawyers have seen their legal careers come to an end because they allowed an employee to have the authority to write checks on the trust account, only for that employee to steal large sums of money from the firm. Even though you may not be the one who stole the money, you will be responsible for refunding the money to the clients. You also are very likely going to lose your law license for it, especially if you don’t have the financial ability to reimburse the client.
Maintain a Balance Sheet or Ledger on Each Client
Don’t trust yourself to remember how much money each client has in your trust account. You must keep precise written records.
Balance Individual Client Ledgers against the Overall Account
Compare your client records against your overall trust account balance to make sure that the numbers match. This will sometimes reveal an accounting error, such as where you’ve forgotten to enter a check or deposit properly. A quick review of your balances every month will let you find and fix any errors quickly. The longer you go without reconciling your accounts, the harder it will be to figure out and fix an error when you make mistakes.
Open an Actual IOLTA Account for Holding Trust Funds
Some lawyers open a second bank account to keep client funds separate from their own but fail to open an interest on lawyer trust account (IOLTA). Make sure that you have opened an actual IOLTA account and not just a second ordinary checking account.
Get Help If You Need It
If you screw up your trust account and don’t know how to fix it, your state bar may be able to help without it costing you your license. Many states now have a provision in their rules of professional conduct that allows their law practice management consultants to assist lawyers without having to report the problems to their ethics board. If you are struggling with fixing a trust account problem, or need advice on how to manage your trust account, check to see if your state bar offers a confidential law practice management assistance program.
Develop Efficiency Through Time Management
The importance of having a work-life balance is often stressed to busy professionals, and one of the best ways to achieve this balance is by developing efficiency in your work. The busier a law practice becomes, the harder it is to keep up with everything that needs to be done. Developing a structure for managing your practice is essential to your long-term success.
Although many systems can be implemented into a law practice, three principles should be included in any time-management plan:
- Eat the Frog. Mark Twain wrote, “if you eat a frog first thing in the morning, the rest of your day will be wonderful.” He also wrote, “if you have to eat a frog, don’t look at it for too long.” This idea forms the central theme to Brian Tracy’s time management book Eat That Frog!, where he advises that you should decide each day which is the worst task you have to do—and then do that task first. Once it is done, you’ll feel as if a burden has been lifted from your shoulders, and it will be easier to get through the rest of the things you need to do.
- Avoid Unnecessary Interruptions. Multitasking is a nice term for being unfocused and inefficient. Learn to focus on one thing at a time. When you are working on an unpleasant task or something that requires concentration, don’t allow yourself to be interrupted without good cause. Block off times during the day when you are not to be disturbed so that you can get your work done, and schedule other periods during the day for meeting with clients, returning phone calls, and doing other tasks of that nature. Don’t take phone calls, don’t answer emails, and stay far away from Facebook and other social media systems during the work periods. When you can focus on one task at a time without interruptions, you will find your productivity goes up dramatically.
- Plan Ahead. Taking a few minutes at the end of a workday to schedule important tasks for the next day can greatly increase efficiency. If you plan your workday in the morning, you will be more likely to push the unpleasant tasks to the bottom of the list. If you plan your workday the evening before, you are more likely to plan to do the worst thing first to get it out of the way. Also, remember that emergencies often come up that can completely derail your day. You might not get past the first item on your to-do list before your day is disrupted. So always ask yourself the question: “If I can only get one thing done on my to-do list, what does it need to be?”
Conclusion
Getting your law practice off to a good start can make the difference between achieving early success in your field or spending years struggling to make ends meet. By developing your communication skills, implementing good financial management practices, and learning how to organize your workday to be more productive, you can build a successful career while also maintaining a good work-life balance.
