Understanding Law Firm Payments: Operating Accounts vs. Trust Accounts

When you hire an attorney, you may hear terms like "trust account" and "operating account" used when discussing payment. While they might sound similar, these two types of accounts serve very different purposes in the legal world. Understanding how your payments are handled can help you feel more confident and informed about your legal services.

Here’s a breakdown of what each account is, how they're used, and why it matters to you as a client.

What Is a Trust Account?

A trust account is used to hold funds that do not yet belong to the attorney. These are client funds held in trust for future legal work that has not been completed. The most common example of this is a retainer—a deposit made by the client at the start of representation to cover anticipated services.

• Funds in a trust account are not owned by the attorney.

• Attorneys are ethically and legally required to keep these funds separate from their own finances.

• Retainers and advance payments for future work are placed in this account.

Trust accounts help ensure the attorney has access to funds to begin or continue work on your case without delay, allowing them to stay focused on your matter rather than shifting time toward chasing down payments, and in the case of non-payment, shifting focus to legal work from other clients.

What Is an Operating Account?

An operating account is the law firm’s business account. This is where the firm deposits earned revenue—that is, payment for work that has already been completed.

• Attorneys transfer earned fees from the trust account to the operating account as work is completed.

• If the trust account is depleted, completed work must be paid directly to the operating account.

In simple terms, once an attorney finishes a portion of your case, the appropriate amount is moved from the trust account to the firm’s operating account. If more work is needed after those funds run out, you may be asked to make another payment—either to replenish the trust account or pay directly to the operating account, depending on whether it is for anticipated work, or completed work.

Why Do Law Firms Use Both?

Using both accounts ensures the firm stays compliant with ethical rules while also keeping your payments organized. Here's how that benefits you:

• You have clarity on where your money is and what it’s being used for.

• You can receive detailed accounting of how funds are applied to your case.

• Regularly refreshing the trust balance ensures your attorney can continue working on your case without delays.

Understanding the difference between trust and operating accounts can make your attorney-client relationship smoother and more transparent. Trust accounts protect your funds until the work is done. Operating accounts reflect the firm’s compensation for services already completed.

If you ever have questions about how your payments are being handled, don’t hesitate to ask your legal team. Clear communication about billing is key to a successful working relationship.

Are you in need of a family law attorney? At Sims & Purzer, Attorneys at Law PLLC, we are committed to transparency and professionalism in everything we do. Rest assured, your funds are safe and well spent with us! Schedule a consultation now!