Jul 09, 2010 Private law practice: Getting the numbers and dollars in the right place
When I was sworn to practice before the United States District Court in Maryland, one of the judges present wished the admittees a wealthy client with plenty of legal problems. I liked more the pro bono service emphasis at my Maryland Court of Appeals swearing-in several months before.
In any event, coming with the territory of private practice is following governing rules to a T about when funds may be considered as earned and, therefore, moved to an attorney’s operating account from the escrow/trust account. Just recently, D.C. Bar ethics opinion No. 355 (which matches the route number of a major road running through my county) dealt at length with this very issue.
Beyond escrow-operating matters, it is critical for every law firm —- and every business, for that matter —- to create and maintain meticulously accurate financial records and systems, and to pay all bills and taxes timely. That might seem to make common sense, but many lawyers have no business world experience, and when they open solo and small practices have many matters to master for running a responsible and profitable business, and to comply with local, state, and federal government regulations concerning taxes, payroll, and non-financial compliance and reporting matters.
Even with my own pre-law school experience in the business world, which mainly involved work for a year as a financial examiner at a big Manhattan bank, I would be silly to handle all my law firm’s accounting and bookkeeping matters myself. The same goes for the concept of practicing without support staff, which some of my colleagues do, even when handling multi-day trials. Ever since going duo with my former law partner Jay Marks, I have always had qualified accounting and bookkeeping assistance throughout the year.
Pursuing my clients’ criminal defense is much more sexy than handling the foregoing obligations, but taking care of the foregoing obligations is essential for doing the interesting work.