Trust accounting

For solos handling client funds — retainers, settlements, cost advances — before they're earned.

Trust accounting is the practice of tracking client funds you're holding but haven't yet earned, kept legally separate from your own operating funds, with a running ledger per client and per matter.

Why it matters for a solo or small firm

Unlike your operating account, trust accounting mistakes aren't just bad bookkeeping — they're ethics violations, even when the money eventually ends up in the right place. Most bar complaints against solos involve trust account errors, not malpractice.

Example

A client pays a $5,000 flat fee up front. Until you've done the work described in your fee agreement, that money stays in trust — you can't move it to your operating account just because the client signed the engagement letter.