Operating v. Trust Account 101
Here’s a question that you might remember from your bar exam. There are operating retainers and trust retainers. How do you know where to deposit your funds?
More importantly, once you’ve determined the answer, how do you keep track of it?
Hint: if you’re using generic accounting software, that last bit gets pretty challenging.
But if you’re using Easy Soft’s Easy TimeBill (ETB) and Easy Trust (ET) modules, then you’ve got it made.
You see, ETB and ET are specialized billing software for attorneys that allow you to make spot decisions: seamlessly. You can consider each scenario on its individual merits. And if you change your mind later, press a button, and voila! you’ve switched accounts without having to reinvent the wheel. That’s strong technology at work.
In contrast, generic accounting software – particularly if it’s not made specifically for law firms – only accounts for a single type of account (i.e. an operating account). Or, it might segregate trust and operating accounts across programs. Often, generic software doesn’t specify which type of account you’re dealing with at all. We’ve seen lawyers keep parallel sets of books to separate their trust accounts from their operating accounts.
In a competitive market, seamlessness is what you’re going for. You spend less time on your legal billing, and more time on your clients. Speaking of which, those clients don’t need to know – and don’t care – about your escrow accounting. So making it seamless works better for you…and better for your client relations.
By the way, the answer to that bar exam question is perfectly grey. Usually, earned fees, personal funds, operating funds, and business funds go into your operating account. But not always. For example, what if your client gives you an advance for next month’s work? Where do you deposit it? Are you now channeling funds between accounts?
Go the easy way: with Easy Soft. For more information about our escrow software, call us at 800.905.7638.