Ethics: Those Annoying Sounds


By Eric T. Cooperstein

Maybe you recognize this scenario: you’re driving your car and you hear a sound. Then you hear it again. What the heck is that? There it is again. Doesn’t sound good. But everything seems to be working. Maybe it will go away.

So, you kind of get used to the sound. It nags at you a little; you know you really should get it checked out. But that will take at least half a day and you’re really busy. As soon as things slow down, you’ll take it in.

It turns out your brakes were shot and you tore up the rotors, or your transmission fluid had leaked out, or the belt was loose and has now snapped (which is why you are reading this article while sitting by the side of the road waiting for a tow truck and an Uber). 

Dang. Should have gotten that checked out.

Like your car, your trust account makes noises, too. Many lawyers cannot hear the sounds coming from their trust account because the rest of their practice is so noisy, what with the voicemails and the whooshing and pinging of emails. Some lawyers have delegated maintenance of the account to a staff member or outside bookkeeper, so the lawyers never get close enough to the account to hear the sounds. Like some of these:

Uncleared checks

These start as a squeak that gets louder the older they get. Listing uncleared checks is part of a routine monthly reconciliation; the bank statement balance cannot be adjusted to match the check register without that list. Old uncleared checks are a sign of a problem. A client who never got their retainer refund or received it but is angry because they think they should have gotten more back. A court reporter who lost the check and thinks the bill is unpaid. My favorite war story is when a client had four uncleared checks in sequence that were over a year old. Four different checks, in numerical order, same dates, but none of them had cleared the bank account. How does that happen? We scratched our heads for a few minutes, then looked in the client file. There they were. The checks had been prepared, signed, and entered in the bookkeeping software but had never been mailed.

Uncleared deposits

These are like an intermittent beep that doesn’t make any sense. A monthly reconciliation will sometimes show an uncleared deposit when the deposit was made right at the end of the month and did not clear in time for that month’s statement. The deposit should show up on the next month’s bank statement. All good. But if an uncleared deposit appears in your reconciliation two months in a row, something is wrong. Most likely that deposit was never made or was accidentally made to the operating account, which means there is a shortage in your trust account. Dang! Get that fixed.

Negative balance in a subsidiary ledger

This is a grinding, metal-on-metal sound. It is possible for a trust account to look like it is balanced but to have a shortage in the amount of funds that are supposed to be held on behalf of a particular client. Maybe a check was issued before incoming funds were deposited (or the funds, inadvertently, were not deposited, see above). Maybe the lawyer disbursed funds to pay an invoice or to reimburse the lawyer for an advanced filing fee, but the lawyer relied on her memory rather than the client subsidiary ledger and issued the check for too much. I've seen lawyers reimburse themselves twice for expenses because they went off their memories. Any of these errors could cause a negative balance in a subsidiary ledger, meaning once again that your trust account is short. This is one reason why it is important to review the list of subsidiary ledger balances in your monthly reconciliation.

Old subsidiary ledger balances

This is more of a groaning sound that typically does not blow up on you, but it gets harder to fix the longer it exists. Why do you still have $227 from the Lipschitz divorce that closed four years ago? Why are you still holding $46 for a filing fee in the Rodriguez real estate closing in 2015? The real groaner is when a lawyer reconciles an account after many years of not maintaining records and discovers that they are not sure to whom the money belongs. You can junk an old car, but, unfortunately, you cannot junk a trust account. 

Lawyers who delegate trust accounting to a staff member or even an outside bookkeeper should review the trust account reconciliation each month and check for these issues. If your trust account makes a noise, turning up the radio is not going to make it better.


Eric CoopersteinEric T. Cooperstein
, the “Ethics Maven,” defends lawyers and judges against ethics complaints, provides lawyers with advice and expert opinions, and represents lawyers in fee disputes and law firm break-ups.
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