Prohibition Against Commingling
Rules and controls for keeping firm funds separate from client and third-party funds.
Ask the IOLTA Assistant
Trust-accounting and IOLTA questions, answered only from official sources with citations. Not legal advice.
Definition
Commingling occurs when law firm funds and trust funds are mixed in a way that obscures ownership or uses trust funds for firm purposes.
Typical Scope
- Earned fees left in trust after entitlement is clear.
- Firm operating money deposited into trust.
- Bank-charge cushions or minimum balances.
- Trust account payments for firm expenses.
Operational Rules
- Do not use trust as operating cash
- Operating expenses, payroll, rent, and firm reimbursements should not be paid directly from client funds.
- Withdraw earned fees promptly and accurately
- Once fees are earned and no dispute exists, move only the earned amount with clear ledger support.
- Limit firm funds to permitted exceptions
- Some jurisdictions permit small firm funds in trust only to cover bank charges. The allowed treatment must be cited.
Examples
The firm deposits $2,000 into trust to avoid a low balance.
Likely improper unless a specific rule permits the amount and purpose.
A client retainer is fully earned but remains in trust for several months.
Move earned fees according to the local rule and document the entitlement.
Review Checklist
Review old trust balances for earned fees.
Identify every non-client credit in the trust account.
Confirm bank-charge funds are permitted and separately tracked.
Block operating-expense payees from trust workflows unless specifically authorized.
FAQ
What is commingling?
Commingling is mixing law firm money with client or third-party trust funds in a way that obscures ownership or uses trust funds for firm purposes.
Can firm money ever be kept in a trust account?
Some jurisdictions permit a limited amount of firm money for bank charges, but the exception must be confirmed under the local rule.
Can I ever keep my own money in a trust account?
As a rule, no — firm funds do not belong in trust. The common exception is a small amount some jurisdictions allow to cover bank service charges, and even that must be permitted by your rule and tracked separately.
When can I move earned fees out of trust?
Once fees are actually earned and no dispute exists, move only the earned amount promptly, with clear ledger support tying it to the work. Both leaving earned fees sitting in trust and withdrawing more than earned create problems.