Managing Client Trust Accounts: Preventing the Most Common Compliance Failures

BY MARGEAUX GREEN

AI Disclosure: This article was edited with Microsoft Copilot’s AI and reviewed for accuracy by Margeaux Green.

For many Washington lawyers, managing a client trust account (IOLTA) is one of the most anxiety-producing aspects of practice. Lawyers regularly describe the responsibility of handling client funds as “heavy,” and for good reason. Trust account violations consistently represent a significant portion of disciplinary actions.

According to the 2024 Washington Discipline System Annual Report,¹ trust account overdrafts accounted for approximately 4 percent of grievances filed against attorneys. Violations of Rules of Professional Conduct (RPC) 1.15A and 1.15B, which govern safeguarding client property and required trust account records, together comprised approximately 10 percent of all cited ethics rule violations.

In my role as the Practice Management Advisor at the Washington State Bar Association, in confidential practice management consultations with members and CLE trainings across the state, I see something important: The issue is rarely indifference. Lawyers care deeply about protecting client funds and are highly concerned about complying with the RPCs. But concern alone does not create compliance. Over time, even careful lawyers can fall into practices that do not fully align with the Rules of Professional Conduct, especially when systems are informal, training is inconsistent, and oversight is insufficient.

Certain scenarios arise again and again:

Delegation without meaningful oversight. Trust accounting is assigned to staff or an outside bookkeeper without a regular review process in place. While delegation is permitted, responsibility is not transferable.
Procedures exist in theory, not in practice. Processes may have been created at some point, but they have not been revisited, tested against the RPCs, or consistently followed. Reconciliations are delayed or reviewed casually, if at all.
Timing misunderstandings around deposits and disbursements. Funds are transferred from the trust account to the business operating account immediately after billing. Or advanced fee deposits paid by credit card are deposited into the operating account and then moved to the trust account.
Technology without structure. Software is purchased, but training is minimal, use is optional, and no one is clearly accountable for ensuring that systems are configured to comply with the trust account requirements.

These situations often do not arise from bad intent. Rather, they arise from gaps in documentation, training, supervision, and process. Trust accounting compliance requires repeatable systems, regular review, and clear accountability within a firm.

In February 2026, the Washington State Bar Association added a free trust accounting and billing tool as a member benefit through a partnership with Smokeball. The tool is designed to support lawyers in managing client funds with structured workflows. Training resources are available to assist with implementation and management. More information is available at www.wsba.org/for-legal-professionals/member-support/smokeball.

This article draws on frequently asked questions published by the WSBA in 2024, which reflect the same issues I see repeatedly in practice. The questions are organized around the most common trust accounting problem areas: handling unclaimed property, recordkeeping, disbursements, deposits, and reconciliations. The goal is to help you identify where your own processes may need attention before a problem surfaces. Please note, the below list includes only a portion of the FAQs published online. To access the complete list of FAQs, visit https://www.wsba.org/iolta-faq.

FAQs

Unidentified Owners and Unclaimed Property

Q. What do I do if I have funds in my account that I can’t identify?

Comment 6 to RPC 1.15A² states that a lawyer has a duty to take reasonable steps to locate a person for whom they hold funds. If that person cannot be found, then the funds must be handled according to the Uniform Unclaimed Property Act, RCW 63.30,³ which usually results in the funds being remitted to the Washington Department of Revenue Unclaimed Property Division,⁴ even if the owner of the funds cannot be determined.

Q. What do I do when I send checks to someone and they don’t cash them?

The RPCs do not address this specifically. However, a good practice would be to establish procedures whereby you review all outstanding checks every six months to see what checks are still outstanding and follow up with those payees to try to determine why the checks were not cashed. This practice would supplement, but not take the place of, monthly trust account reconciliations, which involve accounting for outstanding checks. See RPC 1.15A(h)(6). The state of Washington has determined that funds held by a fiduciary that have not been claimed for three years must be remitted as unclaimed property. (See question 1.)

Q. What do I do when I’m holding funds for someone but cannot locate them?

Comment 6 to RPC 1.15A states that a lawyer has a duty to take reasonable steps to locate a client or third person for whom the lawyer is holding funds. If the lawyer cannot locate the person owed funds by the lawyer, the funds should be treated as unclaimed property and submitted to Washington’s Department of Revenue Unclaimed Property Division.⁵

Recordkeeping

Q. Do I have to keep a “check register” even if I don’t write checks?

RPC 1.15B(a)(1) defines a “check register” and the required elements of the check register. Although the rule describes this document as a check register, it is really a type of ledger used to record any transactions that occur in the trust account. Even if all transactions occurring in the trust account are electronic in nature, you must still have a “check register” on which you enter those transactions. Each entry must include the client matter, date, check number (if applicable), the name of the person to or from whom the funds are paid or received, and the new balance in the account after each transaction.

Disbursements

Q. Am I allowed to give people my trust account information so they can wire funds to me?

Yes, you are allowed, but proceed with extreme caution. If someone is asking to wire funds to your trust account, you will have to give them your account information. Also, be aware that any time you send a trust account check to anyone, you are giving them your trust account information.

Q. RPC 1.15A(h)(5) states that disbursements have to be made by check payable to a named payee or by electronic transfer. Does an outgoing wire qualify as an electronic transfer? How about ACH transfers, or use of a debit card?

Electronic transfers include wires, ACH transfers, credit card receipts, and debit card expenditures. Of these, debit card purchases are the most problematic. Under no circumstances are lawyers allowed to use a debit or ATM card to remove cash from their trust accounts. However, a debit card may be used to make specific purchases for costs on behalf of a client. Some of the problems with this are that the lawyer may forget to enter the transaction into the check register and client ledgers, the lawyer may fail to obtain a receipt for the purchase, and the card may be lost or stolen more easily. For further guidance, see Advisory Opinion 2210.⁶

Q. I don’t want to have to print checks for my trust account. Is it acceptable to transfer funds to my business checking account and then disburse those funds from there?

No. RPC 1.15A(c)(1) states that funds subject to the rules on trust accounts must be deposited and held in a trust account in accordance with RPC 1.15A(h). Depositing client funds into a non-trust account is not allowed.

Q. Am I allowed to state in a fee agreement that I will remove earned fees from a client’s trust account funds as soon as I have performed the services for the client? If I bill a client for my legal fees, how long must I wait before paying myself from the trust account?

Under RPC 1.15A(h)(3), a lawyer may remove earned legal fees from the trust account only after reasonable written notice to the client by means of a bill or some other document. It is implicit in this rule that the client will be informed of the amount of services rendered by the lawyer and the amount due before the lawyer is paid. A fee agreement that allows the lawyer to remove any amount for services prior to billing denies the client the opportunity to ask questions about the services provided. The amount of time depends on the circumstances, but generally it should be sufficient for the client to receive the notice, review it, and raise any questions or disputes with the lawyer. Under 1.15A(g), disputed funds must be held in trust.

Q. How long must I wait after making a deposit before I may disburse those funds?

This is a hard question to answer. RPC 1.15A(h)(7) requires that funds deposited into a trust account be collected and clear the banking process prior to being disbursed. It can sometimes be difficult to determine when funds have cleared the banking process. It is not merely a matter of waiting a certain number of days. For a more in-depth look at this issue, please see the article “Money Mysteries—Understanding the crucial difference between deposited funds and collected funds for lawyer trust accounts” in the July/August 2020 issue of Bar News.⁷

Deposits

Q. When making a deposit to my trust account, may I split the check by depositing a portion into my trust account and the remainder of the check into my business checking or other account?

RPC 1.15A(h)(4) requires that all receipts are deposited intact. That means you may not take one check and deposit various portions of it into different accounts. If depositing a check that represents funds belonging to both the lawyer and a client, RPC 1.15A(h)(1)(ii) states that the check is to be deposited into the trust account and then after the check has cleared the bank, the portion belonging to the lawyer must be removed.

Q. Am I allowed to accept credit card deposits into my trust account?

Lawyers are allowed to accept funds into their trust accounts that are paid by credit card. However, credit card receipts must be deposited into the appropriate account. If you accept advance fees and deposits, those advance deposits must go directly into your trust account. If you accept credit cards for the payment of earned fees, such as for payment on an invoice or for payment of a flat fee accompanied by a proper fee agreement, those fees must go directly into an operating account and not the trust account. See RPC 1.15A, Comment 8.

Under certain circumstances, a lawyer may charge credit card fees to clients. See Advisory Opinion No. 2214.⁸

Q. The bank wants to know the taxpayer ID number to set up my IOLTA account. Where do I find that?

All the pooled IOLTA accounts in Washington have the same Taxpayer ID number: 91-1263533. Sometimes banks require lawyers to fill out a “Request to Establish IOLTA” form. The taxpayer ID number can be found there. The form is available on the Legal Foundation of Washington’s website.⁹

Q. How can I determine if my bank is allowed to offer IOLTA accounts? If not currently allowed, how does my bank become qualified to offer IOLTAs?

In order to determine if your bank or credit union offers IOLTA accounts, visit the Legal Foundation of Washington’s website (https://legalfoundation.org/iolta/) and review the list of authorized financial institutions. You will also find information on this page about how your bank can be put on the list.

Reconciliation

Q. What does it mean under RPC 1.15A(h)(6) to reconcile my trust account?

Reconciling your trust account records is required by RPC 1.15A(h)(6) and is a two-step process. First, you must reconcile your checkbook register to your bank statement. This step confirms that the transactions recorded in your check register have cleared the bank, identifies any outstanding items, and ensures that your adjusted bank balance matches the balance in your check register.

Second, you must reconcile the total of all your trust-account client ledger balances to your reconciled checkbook register balance. When you add up all the client ledger balances on a specific date (the same date as you performed your checkbook reconciliation) they should total the same amount that is in your checkbook register balance for that day, ensuring you know who all the funds in your trust account belong to. A fillable PDF form for performing trust account reconciliations is available in the WSBA Monthly Reconciliation and Review Report.¹⁰

MORE ONLINE > To view the full list of IOLTA account FAQs, visit www.wsba.org/iolta-faq. Find all of the WSBA’s IOLTA resources at www.wsba.org/for-legal-professionals/ethics/iolta.

SIDEBAR

More Resources to Explore

WSBA Managing Client Trust Account Booklet. This booklet provides detailed guidance on recordkeeping obligations, reconciliation procedures, and deposit and disbursement rules.
New Member Benefit—Free Trust Accounting and Billing Tool. In February 2026, the WSBA added a free trust accounting and billing tool as a member benefit through a partnership with Smokeball. The tool is designed to support lawyers in managing client funds with structured workflows. Training resources are available to assist with implementation and management. More information is available at www.wsba.org/for-legal-professionals/member-support/smokeball.
Free Help For Members. Ethics: For IOLTA questions relating to the Rules of Professional Conduct please call our Ethics Line at 206-727-8284. Account Management: For questions related to managing your trust account, please set up a free practice management consultation at www.wsba.org/consult. The consultation will be scheduled with the author of this article, Margeaux Green, the WSBA’s practice management advisor.
WSBA Law Firm Practice Guides. Explore these five guides designed to support the business of your law practice: Hanging Your Own Shingle, Disaster Planning, Cybersecurity, Document Retention, and Closing Your Practice. These guides combine narrative guidance with checklists and templates so you can make informed business decisions and build systems that work for your practice. Access the full collection at www.wsba.org/guides. For individualized support, schedule a free, confidential consultation at www.wsba.org/consult.

ABOUT THE AUTHOR

Margeaux Green is the practice management advisor at the Washington State Bar Association and a licensed Washington attorney. She assists solo and small-firm legal practitioners to run effective and efficient law practices, focusing on business best practices and legal technology. Prior to joining the WSBA, Green practiced family law. The recommendations in this article are based on her personal opinions; they are not the official position of the WSBA and cannot form the basis of a defense in a malpractice claim or disciplinary proceeding.

NOTES

1. www.wsba.org/docs/default-source/licensing/discipline/2024-wa-discipline-system-annual-report.pdf?sfvrsn=d3851af1_10.

2. www.courts.wa.gov/court_rules/pdf/RPC/GA_RPC_01_15A_00.pdf.

3. https://app.leg.wa.gov/RCW/default.aspx?cite=63.30.

4. https://dor.wa.gov/about/unclaimed-property-ucp.

5. https://dor.wa.gov/about/unclaimed-property-ucp.

6. https://ao.wsba.org/print.aspx?ID=1659.

7. https://wabarnews.org/wp-content/uploads/2021/10/Bar-News-July-Aug.-2020.pdf.

8. https://ao.wsba.org/print.aspx?ID=1660.

9. https://legalfoundation.org/iolta/information-for-legal-professionals/.

10. www.wsba.org/docs/default-source/licensing/iolta/wsbamonthlyreconciliation-reviewreport.pdf?sfvrsn=ac293ff1_6.