Hiring an attorney can be an expensive undertaking. Whether you need to defend yourself against criminal charges, file a personal injury lawsuit or litigate the terms of your divorce, your lawyer may invest dozens of hours, amounting to thousands of dollars worth of service.
Usually, unless they accept a personal injury case on a contingency fee basis, your lawyer will request a retainer. The retainer is a lump-sum payment made at the beginning of your professional relationship. It usually represents many hours of work. Your lawyer should deposit those funds into a special bank account and document their use of the funds carefully.
Why a trust account is necessary
Unlike a standard bank account that belongs to an individual or business, a trust account is subject to oversight. No one person can withdraw money from the account without first meeting certain criteria.
A trust account allows them to securely deposit a retainer so that the client cannot spend the money that they depend on to get paid for their work. The trust account also requires that the lawyer provide evidence when they want to make a withdrawal to reimburse themselves for the work that they have performed.
Carefully tracking the number of billable hours worked on a case and submitting that documentation to the client is an important step for an attorney trying to claim part of the retainer paid by that client. Unfortunately, some lawyers will not properly deposit retainer funds or account for how and when they collect that money. In some cases, they may even misrepresent how long they worked on the case to keep all of the retainer when they should return some of it based on their actual billable hours.
Mishandling retainer funds is a common source of legal malpractice claims. Knowing how a lawyer should handle your retainer can help you identify financial legal malpractice by a professional you have hired.