If you are an attorney or manage a law firm and also maintain a trust account, you know how important it is to keep these accounts in order. Every bar association has their specific rules, but one that goes across the board is maintaining and reconciling your trust account on a regular basis. As a non-attorney, it’s sometimes hard for me to believe that an attorney can be found guilty of DUI (first offense) and they probably won’t lose their license to practice law, but a few dollars off on their trust account can have then disbarred!
Enter the tale of someone we know, who will remain anonymous for this blog post. This person is a small law firm owner and they have a trust account and use it occasionally. As our client, we reconcile their trust account religiously. They accepted a client, and agreed to a fixed fee for facilitating a relatively simple business transaction. Funds were deposited into their trust account via wire and then they were given instructions by the related parties on where to disburse the funds to. While everything on the face of the transaction appeared to be legitimate, it turns out that the initial funds that were sent into our client’s trust account were actually stolen funds. State and Federal authorities were involved in the matter and they had the bank freeze the trust account, despite the fact that there were other clients’ funds in the trust account. It was a nightmare situation to say the least.
The firm’s owner not only had to spend time with the State and Federal agencies requests, they had to argue with their own bank to get the clients’ funds back, open new trust accounts, report the matter to their local bar association and deal with their requests, and to top it all off, they lost the fee that was going to be paid for facilitating the deal. Needless to say, a few lessons were learned during this process. The first was that the trust accounting was invaluable. Interactive Accountants was able to advise our client what was held in trust, by client matter, before the fraud occurred, and this evidence was used in dealing with their bank. Second was that better client acceptance procedures were initiated, and this too has proven invaluable.
As an attorney or law firm, accounting or just general finance isn’t something that gets taught in Law School (maybe it should, but let’s not go there!). And maybe (most definitely!) the first thought in most attorney’s heads when they wake up in the morning isn’t “damn I have a great accounting team at Interactive Accountants”, but it certainly helps getting to bed easier knowing that when you are a client of Interactive Accountants we’ve got your back!
Why Interactive Accountants? It’s really all in our name actually. We INTERACT with our clients on a monthly or quarterly basis to ensure that their financial and tax matters are always up to date. Your team of dedicated accounting professionals are always engaged with you and constantly are keeping things up to date. At least every quarter you will have a meeting with your managers and get the run down on your financials as well as where you stand on taxes. You will be advised on any changes in tax law and as your business grows, your team grows with you. Are one stop shop mentality provides the Attorney with one accounting firm that can get the job done, no matter the tax or accounting concern. Click here to learn more about our Accounting for Legal Professionals and Law Firms services
If you are a Legal Professionals or Law Firm, you need a CPA firm that truly understands what you’re working with, and that firm is Interactive Accountants. So give us a call or schedule a free consultation with our owner Matthew Shiebler, CPA. He’s been practicing accounting for over 25 years now and is a business owner, just like you!