![]() Area for the client’s and the lawyer’s signatures.Any amounts payable to third parties, with copies of the invoices to be paid.Amount payable to the firm for expenses paid by the firm during the course of the representation.Amount payable to the firm for fees earned per the settlement agreement.Total amount of the settlement check received and the payee.It defines the proposed disposition of the settlement fund check and should include the following: The settlement statement is your audit trail and it should be reviewed and signed by both the client and the lawyer. If it is an electronic transfer of funds, save a copy of the verification of deposit.Deposit the check into the firm’s trust account.Scan or copy the check and save a copy in the client’s file.(This is good risk management if you ever need to re-create your trust accounting records.) On the check, write the case number, client name and case description.If the check is made out to both the client and the law firm, you need both signatures. It can’t hurt to emphasize at the start of this checklist that you should never disburse funds until you have faithfully recorded and deposited the check - and made certain it has cleared. You always want to review and follow your state’s particular ethics guidelines and procedures, but here is a general checklist, and some best practices, for handling settlements. Properly Tracking, Recording and Paying Settlement Transactions Here is an example illustrating a basic settlement statement. A settlement check is never directly deposited into your firm’s operating account. Depositing into the trust account serves as notice to the world that this money is not for you to use for regular business operations. Settlement funds are always deposited directly into your law firm’s trust account and are paid to parties of the settlement from the trust account. In the case when a settlement is not reached and there is no settlement check for the client, the fee agreement should also explain what expenses or fees the client will be responsible for paying, if any.Īs an example, below is a sample of text that may be used in a contingent fee agreement.Ĭertain types of funds require special handling, and settlement funds fall into this category. This document should clearly communicate to the client how funds from a settlement check will be disbursed. So, I’m following up with more tips on handling trust accounting transactions, focusing on settlements.īest practices for handling settlement funds starts with a properly written and executed contingent fee agreement. “So that’s how you do that!” My article on handling retainers, “ Would You Pass a Trust Account Audit?,” generated a lot of inquiries and ah-hah moments.
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