When Attorneys Commingle Funds With Clients
Have you been accused of commingling funds with client trust accounts in Los Angeles, California? This ethical allegation can result in harsh consequences if the State Bar finds that you engaged in professional misconduct. You’ll need experienced legal representation to advocate for you and help you navigate the process.
The Rodriguez Law Group is here to help if you’re being investigated by the State Bar of California. We’re familiar with the attorney discipline system and can protect your rights as we work to resolve the issue as quickly as possible.
Contact our Los Angeles, CA law office today to schedule a free consultation. We’ll discuss your situation and the allegations against you and determine the best course of action to avoid disciplinary charges. Call us at (213) 995-6767 today.
- 1 How The Rodriguez Law Group Can Help If You’ve Been Accused of Commingling Funds
- 2 What Is Considered Commingling in California?
- 3 What Are the Potential Consequences of Commingling Funds in California?
- 4 Contact an Experienced Los Angeles Professional Misconduct Attorney If You’ve Been Accused Of Commingling Funds With Clients
How The Rodriguez Law Group Can Help If You’ve Been Accused of Commingling Funds
The California attorney discipline system is different from the civil or criminal justice system, with unique rules and procedures. You’ll want a knowledgeable legal representative to protect you if you’re facing allegations of misappropriation of client funds.
A Los Angeles professional misconduct defense lawyer at The Rodriguez Law Group can advocate for you and ensure you understand your rights and obligations.
If you hire us for help with your commingling of funds accusations, we’ll:
- Represent you throughout the process so that you can continue practicing law and focusing on your clients
- Guide you through the complex lawyer disciplinary system
- Submit requested documentation, evidence, and responses on your behalf in a timely manner
- Argue for you in State Bar proceedings, including an Early Neutral Evaluation or hearing
Contact The Rodriguez Law Group as soon as you receive correspondence from the State Bar that implicates you in commingling client funds. We’ll evaluate the validity of the accusations and gather exculpatory evidence to protect your reputation and avoid excessive discipline.
What Is Considered Commingling in California?
Client trust accounting is an ethical and fiduciary duty that California attorneys must strictly engage in and follow. If an attorney accidentally or intentionally mixes their personal or business funds with a client’s funds (e.g., a client trust account), it’s considered commingling.
Commingling could include:
- Depositing your personal or law firm funds into a client trust bank account
- Depositing a client’s funds into a personal or business account
- Keeping money belonging to you or the law firm in a client trust account – you must withdraw your fees as you earn them (e.g., if the client paid a retainer that you bill against)
- Using client trust account funds to pay for personal expenditures
- Participating in an overdraft protection program that automatically deposits a fixed amount that exceeds the amount needed, leaving additional funds (it must only deposit the exact amount required to satisfy the overdraft)
Rule 1.15 of the California Rules of Professional Conduct explicitly states that attorney or law firm funds shouldn’t be deposited or commingled with client trust account funds unless:
- They’re needed to pay bank charges (in which case you must only deposit what is necessary to cover the fees)
- They partially belong to both the client and the attorney – and once the attorney’s interest in the funds becomes fixed and undisputed, the attorney must withdraw their portion as soon as feasible
The rules against commingling also apply to third parties (e.g., funds you’re holding pursuant to a lien).
How Can You Avoid Commingling?
Client trust accounting is required of all attorneys in California and can help you avoid commingling funds. When you agree to hold money in trust, it is considered a fiduciary, non-delegable duty to account for every cent while it’s in your possession.
As a lawyer, you must keep track of:
- The funds you’ve received from or on behalf of every client
- How much money in each trust account belongs to each client
- Any payments or transactions made on behalf of a client
You must maintain client ledgers, account journals, and bank statements to know what’s going on with each account.
In addition to keeping track of every client trust account transaction, reconciling your accounts every month will help you avoid commingling funds inadvertently. It’s also required under Rule 1.15. Reconciliation involves balancing your client trust account records to ensure that they match the bank’s statements.
You should also maintain separate accounts: trust accounts (including IOLTA accounts) and an operating account. The trust accounts will hold the client’s money that belongs to them, whereas the operating account will hold money belonging to you and the law firm.
Additionally, you should never disburse funds before they clear. If the check bounces, you risk taking another client’s funds or an account overdraft, leading to a negative balance. This can lead to a commingling of funds allegation.
What Are the Potential Consequences of Commingling Funds in California?
Your possible punishment will depend on the facts surrounding the commingling of funds (e.g., the amount of money involved, the number of clients it affected, and the length of time it’s been going on).
You could face:
- Public or private reproval
- Disbarment in severe cases
- Any other authorized discipline or sanctions
If the commingling amounted to conversion, you could face a civil lawsuit and additional penalties.
Contact an Experienced Los Angeles Professional Misconduct Attorney If You’ve Been Accused Of Commingling Funds With Clients
If you’re facing allegations of commingling funds, you’ll want an experienced Los Angeles professional misconduct defense attorney advocating for you.
Contact The Rodriguez Law Group today to schedule a free initial consultation. We’ll review the accusations against you and prepare a defense strategy to protect your professional representation.
Last Updated on December 3, 2022