IOLTA FAQS – How do we handle client over payments?

Client received a $1,560 invoice from your law firm.  Client decided to round off the amount and mailed a check for $2,000.

Options for depositing the $2,000 check.

  • Deposit the full $2,000 to the operating account.  Incorrect.  The $2,000 check includes $440 of funds the firm has not earned.  Unearned funds are never deposited to the operating account.
  • Split the deposit via banker voodoo.  $1,560 is deposited to operating and $440 is deposited to IOLTA.  The state trust accounting guides advise against this process.  While the funds to end up in the correct bank account, the audit trail is messy.
  • Deposit the full $2,000 to the IOLTA account, wait for funds to clear, and transfer $1,560 from IOLTA to the operating account.  Correct.

If your law firm does not have an IOLTA account, return the payment to the client and request a payment for $1,560.  Or quickly open an IOLTA account.

Continue Reading...

IOLTA FAQS – Are preprinted deposit slips for the IOLTA Account required?

Yes, preprinted deposit slips are required.

Appendix B-1 of the 2014 Arizona Client Trust Accounting for Arizona Attorneys guide states “Deposit slips should always be printed with the name of the lawyer or law firm, IOLTA or Trust Account Designation, account number, and routing number.”

We see increased levels of bank and trust accounting errors when law firms do not use preprinted deposit slips.  Without a preprinted account number on the deposit slip, the bank will frequently deposit IOLTA funds into the firm’s operating account.

Suggested Deposit Slips

Deposit Slip Format

Include a reference to IOLTA account on the deposit slip.

The Law Firm, PLLC
IOLTA Trust...

Continue Reading...
Close

50% Complete

Two Step

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.