Other People's Money

Trust Account

A bank account, labeled as a trust account, for the money of clients and others that a lawyer holds in connection with a representation. Rule 5-1.1(a)(1) keeps that money apart from the lawyer’s own, and putting firm money in with it is commingling. The rule allows it in only two cases: enough firm money to pay the account’s bank charges, and a lawyer’s deposit to replenish a shortage.

IOTA Account

A pooled, interest-bearing trust account for client money too small or held too briefly to earn interest for the client beyond the cost of earning it, required by Rule 5-1.1(g). The bank sends the interest to the foundation the rule names, which funds free civil legal services for low-income Floridians, so neither the firm nor the client receives it. Money that can earn net interest for its owner belongs in a separate interest-bearing account for that client.

Trust Accounting Records

The records Rule 5-1.2(b) requires at a minimum: deposit slips, numbered checks, records of every transfer and wire, the bank statements, a receipts and disbursements journal, and a ledger for each client or matter. Each journal and ledger entry names the client or matter, the date, the check number, and the reason the money moved. The records may be kept digitally, and Rule 5-1.2(f) keeps them for six years after each representation ends.

Three-Way Reconciliation

The monthly check Rule 5-1.2(d)(1) requires. The bank balance is reconciled to the journal, listing deposits in transit, outstanding checks by date and number, and anything else that separates the two. The reconciled balance is then compared with the total of the client ledgers, with a specific description of every difference and its reason.

Collected Funds

Money deposited, finally settled, and credited to the trust account, under Rule 5-1.1(j). A lawyer may pay out money held for a client only once that client’s funds are collected, except against six kinds of low-risk deposits, such as cashier’s checks and government checks. A payment made against any other deposit before it clears is at the lawyer’s risk, and if the deposit fails, other clients’ money covered the payment.

Earned Fees and Disputed Funds

A fee the firm has earned is the firm’s money, and Rule 5-1.1(f) requires the firm to take it out of trust within a reasonable time after it comes due. If anyone disputes the firm’s right to it, the disputed part stays in trust until the dispute is resolved, and the rest goes out promptly. An advance fee billed against later work stays in trust until earned, while the rule’s comment treats a true retainer, paid only to secure the lawyer’s availability, as the lawyer’s money on receipt.

Trust Account Shortage

A trust account is short when it holds less than the firm owes the clients and others whose money is in it. Rule 5-1.1(a)(1)(B) lets a lawyer replenish it with the lawyer’s own money, up to its amount, but the lawyer must immediately tell the Bar’s lawyer regulation department the shortage, its cause, and the replenishment. When a deposit fails, Rule 5-1.1(j) requires the lawyer to act immediately to protect the other clients’ money.

Written Trust Plan

The plan Rule 5-1.2(c)(1) requires of every firm with more than one lawyer, for each trust account, given to every lawyer in the firm and reissued when it materially changes. It names each signatory, each lawyer responsible for the monthly and annual reconciliations, and each lawyer who answers the firm’s questions about the account. In The Florida Bar v. Rousso, the Supreme Court of Florida approved a referee’s finding that a lawyer’s responsibility for trust money cannot be delegated to a nonlawyer employee.

Part 1: Read the Month

Temko & Eden, P.A. A three-lawyer firm on Beach Street in Daytona Beach. It still carries the names of its late founders. Dana Whitfield, the managing partner, handles civil litigation and real estate closings. Luis Ortega, a partner, handles family law and probate, and Kim Nguyen, an associate, handles personal injury. Marcy Cole is the legal assistant, Ron Pike is the bookkeeper and office manager, and you are the firm’s paralegal.

A note from Dana Whitfield, May 4. April’s trust statement came in this morning, and Ron has the journal and the ledgers posted through April 30. I want the April reconciliation on my desk by Friday, prepared by you and ready for me to review and sign. If anything doesn’t tie, don’t adjust it away. Tell me what it is and what it means.

Download the trust account workbook and start with the Accounts sheet, which says what each client’s money in trust is for. Then read the three records one at a time: the Bank Statement, the Journal, and the Client Ledgers. Every entry in the Journal should appear on one ledger. Every deposit and payment the bank made should appear in the Journal, now or later. Mark anything on one record that you cannot find on another.

Part 2: Reconcile the Account

Fill in the cells marked (your entry) on the Reconciliation sheet, one section at a time. In section 1, list each deposit in transit and each outstanding check, by date and check number. In section 2, list any entry the bank made that the Journal does not show. In section 3, correct any ledger whose balance is wrong, and say in a sentence why it changes. The Check rows tell you whether the three balances agree after your entries. Agreement is not the finish line, because Rule 5-1.2(d)(1)(B) wants every difference described with its reason. Write those descriptions in section 4, and sign section 5 as the person who prepared it. If you are stuck, run the Reconciliation Coach, paste the records, and answer its questions. It will not hand you the difference.

Part 3: Write the Memo to Dana Whitfield

Write Dana a memo of 250 to 400 words. Say what the reconciliation shows, what caused the difference, and whose money is affected. Say which rules apply, what the firm must do now, who must do it, and by when the rule says. End with one change to the firm’s procedures that would have stopped April’s problem before it started. Before you send it, run the Shortage Memo Checker with the text of Rules 5-1.1(a)(1), 5-1.1(j), and 5-1.2(d), and fix any statement the rules do not support.

Part 4: Write the Trust Plan

Write Temko Eden’s written trust plan for its trust account, on one page. It must name what Rule 5-1.2(c)(1) requires: each signatory, the lawyer responsible for the monthly and annual reconciliations, and the lawyer who answers questions about the account. Then say who prepares each record, who reviews it, and when. Say which deposits the firm will pay out against before they clear, and what happens when a deposit comes back. Read Plan A in the LegalFuel samples first, and decide for yourself what Ron may do and what only a lawyer may. Then run the Trust Account Tester. When it asks the size of the firm, describe Temko Eden. Answer each of its four scenarios from your plan and the rules. Where your plan gives no answer, revise the plan.

Part 5: Post Your Deliverables

Create one new discussion thread. Attach the trust account workbook with its Reconciliation sheet completed, your memo to Dana Whitfield, and Temko Eden’s written trust plan.

Part 6: Share Chat Link

Include one AI chat link with a 1–2 sentence explanation of what the conversation shows and why you chose to share it.

Reconciliation Coach

Letting the model ask while you answer is Socratic elicitation, and it keeps the finding yours. Next month’s reconciliation will be yours alone, so the habit of tracing an item from one record to the next is the thing to practice.

Shortage Memo Checker

Holding the model to the rule texts you paste is source grounding, and asking for the quoted sentence turns each verdict into something you can check yourself. A model answering from memory can describe a trust rule Florida never adopted, or cite the right rule by the wrong subdivision.

Trust Account Tester

Role assignment puts the model in the examiner’s chair, where it writes the cases and keeps the verdicts, so every call is yours. Your answers then test your plan against situations you did not choose.