Trust accounts are a minefield for law firms. Even small mistakes, like commingling client funds with firm operating money, can put your license at risk. Many attorneys assume their bookkeeper or paralegal has it covered, but unless that person is trained in IOLTA rules, you may be walking into a compliance nightmare.
One of the most common errors is failing to reconcile the trust account every single month. When client retainers, settlement funds, and court fees all move through the same account, even one untracked deposit or payment can create a shortfall you do not notice until it is too late. Regulators do not care if it was “just sloppy bookkeeping,” they see it as a breach of fiduciary duty.
The fix is simple: put structure around your trust accounting. That means three-way reconciliations (bank statement, client ledger, and trust ledger), strict separation of operating and trust funds, and documented oversight by an attorney, not just staff. A clean trust account is not just about avoiding sanctions; it is about protecting your reputation and your clients’ confidence.