Most law firms have two bank accounts: general account and mixed trust account. The Law Society has guidelines regarding what money goes into trust account and what money goes into general account. It is important to understand the rules.
Trust account
Money received
- on behalf of a client
- for future disbursements
- for future or unbilled legal services
- an overpayment of your billed services
should be paid immediately into a trust account.
Trust funds received should be deposited by the end of the next banking day.
If there is an overpayment of your billed services, you should transfer the amount that belongs to you to your general account as soon as practical. The overpayment could be held in trust for the client for future fees and disbursement or returned to the client depending on the client's instructions.
General account
Money that is entirely:
- payment for completed legal services for which you have sent the client an invoice
- reimbursement for proper expenses you have made on behalf of a client
- your or your firm's money
- a general monetary retainer
would normally be deposited into your general account.
We provide legal bookkeeping services, the Law Society spot audit assistance, and income tax return services.
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Four different types of trust bank accounts used in a law office