Commingling

What is commingling?

Commingling is mixing client funds with your firm's operating money. For lawyers, accountants, and other professionals who hold client funds in trust, commingling is a serious ethical violation. Even temporary mixing of funds, such as depositing a retainer into your operating account, constitutes commingling. Bar associations and licensing boards treat commingling as grounds for discipline, suspension, or disbarment.

How commingling happens

The most obvious violation is depositing client funds directly into operating accounts. But commingling also occurs when you leave earned fees in trust too long, pay firm expenses from trust accounts, or deposit personal funds into client trust accounts. Sloppy bookkeeping creates accidental commingling. Even well-intentioned shortcuts, like temporarily borrowing from trust during a cash crunch, are violations.

Preventing commingling violations

Maintain completely separate bank accounts for trust and operating funds. Transfer earned fees from trust to operating promptly after billing. Never pay firm expenses from trust. Reconcile trust accounts monthly and compare to client ledgers. Train staff on proper deposit procedures. When in doubt, keep funds in trust until you confirm they are earned. The safeguards are simple, but discipline must be absolute.