There are a number of items to consider:
- Do you want to provide a notice and accounting each time an expense is paid, or periodically (perhaps monthly) on a consolidated basis?
- Do you want to pay expenses directly from the trust account, or advance fees on behalf of the client?
- What forms of payment will the court accept, and what form of payment do you want to use?
There are basically two techniques you can use, either of which is permissible:
- Direct Payment of Costs from Trust Account:
Get consent in engagement agreement regarding payment of expenses. Place the advance for expenses in your trust account. Open a client subaccount ledger card, record deposit on main ledger card for trust account and client subaccount ledger card. Pay the expense with a debit card or E*check that draws on the trust account. Retain or create a record of the debit deduction from the trust account. No later than the date of the payment, send the client a notice and accounting for the expense and deduction. Record the deduction on the main trust account ledger and the client’s subaccount ledger.
- Advancing Costs with Reimbursement from Trust Account:
Include consent in engagement agreement regarding advance and collection of expenses. Place the advance for expenses in your trust account. Open a client subaccount ledger card, record deposit on main ledger card for trust account and client subaccount ledger card. Pay the expense with a law firm credit card, or with a debit card or E*check that draws on the law firm business/operating account. On a periodic basis, write a check or make an ACH transfer from the trust account to the law firm business/operating account to pay all expenses advanced. If the law firm credit card is used for nothing except advanced expenses, the credit card statement could be paid directly by check drawn on the trust account. No later than the date of the deduction from the trust account, send each client for whom expenses were advanced and then collected a notice and accounting for the expense and deduction. Record the deductions on the main trust account ledger and on each client’s subaccount ledger.