Client Account Surplus

Trust Bank Account transactions in PCLaw can only be associated to matters and not to any G/L accounts. This is probably due to the Trust Bank Account regulations in US/Canada for which PCLaw was primarily designed for. This means that any receipt or payment from Trust Account cannot be associated directly with any G/L account – the system will only accept matter allocations.

The above may present problems for new firms wishing to adopt the PCLaw system in jurisdictions in which banks have no Law Society rules they need to comply as far as Law Firm Trust Accounts go. Such firms may ponder with Trust accounting issues such as how to maintain minimum balances, how to account for non-matter related interest income and bank charges arising from Trust accounts.

The following is involved to get round this:

o   Opening of a Client Surplus Asset account (this can be a General Bank account or simply a current asset G/L account)

o   Opening of a client called “Client A/c Surplus”

o   Opening of “Client A/c Surplus” matters for each Trust Bank Account

Every time a non-matter entry is to be made from Trust you would use the Client Surplus matter for that Trust account. Then and opposite entry is done via the Client A/c Surplus Asset account.

Example:  Interest from Trust A/c needs to be accounted from Trust A/c 1 for 1,000.00. First one would do a Trust receipt against client surplus matter 0000-001 for 1.000.00. Then one would debit Client A/c  Surplus Asset A/c and credit Interest Income G/l account with 1,000.00. This is achieved via Firm Receipt (if the Client Surplus Asset account is opened as a General Bank account) or a journal entry (if the Client Surplus Account is opened as a G/L account).

At all times the balance in the Client A/c  Surplus Asset account must be equal and opposite to the total of Trust balances in all the Client A/c  Surplus matters. One would have to keep a tab on this manually.

I know in the past for different reasons PCLaw had a version for firms in Scotland to enable the association and tracking of the Client Surplus Asset and matter accounts. Firms in Scotland can have a substantial Client A/c Surplus and they can then overdraw the Trust Account for normal client matters provided the amounts overdrawn do not exceed the  balance in the Client A/c  Surplus. PCLaw had a feature to automatically track this. I am not sure if the Trust regulations for law firms in Scotland have changed or if Lexis still supports this version of PCLaw.