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Understanding commingling and its negative effects

| Feb 24, 2020 | Uncategorized |

You wanted to make sure you placed your assets somewhere they’d be safe. That’s why you gave them to your attorney and told them you wanted to open a trust. You did all the paperwork, and you expected everything to be fine.

A year or two later, you went back to the firm and asked to change your revocable trust. The trust was there, but it had never been funded. The attorney you were working with said that they forgot to move the money over from their account, but that drew up an important question in your mind: Why did they have it in their account in the first place?

What is commingling?

Commingling is when your attorney combines funds that are not theirs with their own personal accounts. For example, if you give your attorney $10,000 to put into a trust but the attorney holds that money in a personal account, then that is an example of commingling. The money that you give an attorney to hold or use for your benefit should never end up in an attorney’s personal bank account.

If an attorney does commingle funds, then they are subject to discipline through the Rules of Professional Conduct.

Why is commingling so bad? Isn’t the money still there when you need it?

Commingling is bad for many different reasons. With commingling, an attorney could:

  • Use the money received from you, the client, for their own personal needs
  • Mix up your funds with their own in their personal accounts
  • Transfer money between their account and a business account, making it difficult to track where your money is going
  • Using your assets to fund their own purchases, such as putting a down payment on a home

With commingling, one of the challenges is that it makes it hard to see where your money is going and what it’s being used on. That means that your attorney could essentially waste your money and intend to “reimburse you” later with their own funds. They could use your money and hope you simply don’t notice. It’s bad news all around.

What should you do if you think you’ve been a victim of commingling?

Commingling is a kind of legal malpractice, and it should not take place in any kind of legitimate law firm. The first thing you’ll want to do is to collect evidence of the commingling of your funds with the attorney or attorneys’ accounts. Then, you will want to find an attorney who specializes in legal malpractice to start building a case against the law firm or individual who misappropriated your funds. It’s important to do this as soon as possible to have a better chance of getting your money back from those who violated your rights.