Commingling Client Funds: What It Is and How to Avoid It

Commingling client funds means mixing a lawyer's or firm's own money with client money in the trust account. Under ABA Model Rule 1.15, client property must be kept separate from the lawyer's own property, and the only firm money the rule lets you put in trust is the amount needed to pay bank service charges on that account. Commingling violates the professional conduct rules, and whether any conduct is also a crime depends on the facts and your state's law.

What does commingling client funds mean?

In plain English, commingling means putting or leaving the firm's own money in the client trust account, mixed together with client money.

The mix does not have to be large. An earned fee that stays in trust is enough to blur whose money is whose, and the records have to show which part is the lawyer's.

What does the ABA rule say about attorney commingling client funds?

The ABA's Model Rule 1.15 covers safekeeping property. 3 parts matter here.

Rule 1.15(a). Client and third party property held in connection with a representation must be kept separate from the lawyer's own property. Funds go in a separate account, with complete records kept.
Rule 1.15(b). A lawyer may put the lawyer's own funds in the client trust account only to pay bank service charges on that account, and only in the amount needed for that.
Comment [2]. Mixing the lawyer's funds with client funds is normally not allowed. Paragraph (b) is the exception, and accurate records must show which part of the money is the lawyer's.

Read the full text on the ABA's Rule 1.15 page and its official comment.

A caution. ABA Model Rules are models, not law. Your firm is bound by your own state's version, so the state differences below matter.

How do states treat commingling?

Every state source cited here prohibits it. The exceptions differ.

Jurisdiction	Where it sits	What it says
ABA Model Rule	Rule 1.15(a), (b), comment [2]	Keep client property separate. Lawyer funds only for bank service charges.
California	Rule 1.15(c)	Exceptions: funds reasonably sufficient for bank charges, and mixed client and lawyer funds. The lawyer's share must be withdrawn at the earliest reasonable time once it becomes fixed.
Florida	Rule 5-1.1(a)(1)	Headed "Commingling Prohibited." Exceptions: funds no more than reasonably sufficient for bank charges, and a deposit to replenish a trust shortage, no more than the shortage, with immediate notice to the Bar.
New York	Rule 1.15(a) and (b)(3)	A lawyer holding others' funds must not misappropriate or commingle them. Funds reasonably sufficient to maintain the account or pay account charges may be deposited.
Texas	Rule 1.15 (formerly 1.14)	Client funds go in a separate trust or escrow account. The State Bar's trust account guide lists "No commingling!" at the top of its 3 rules.

Florida's shortage exception and California's mixed funds exception go beyond the ABA model. Read your state's rule itself, not just a summary.

What are examples of commingling funds?

Here are generic examples. Each is commingling, except the last, which is the mirror image: client money ends up in the firm's operating account.

Example	Why it is a problem
Depositing an earned fee into trust and leaving it there	The firm's money now sits mixed with client money. The ABA rule allows lawyer funds in trust only for bank service charges.
Depositing a check that is partly the client's and partly the firm's, then not moving the firm's share	California requires the lawyer's share to be withdrawn at the earliest reasonable time once it is fixed. New York lets the lawyer's portion come out when due, unless disputed.
Topping up trust with firm money beyond bank charges	The ABA rule limits lawyer funds to the amount needed for bank service charges. Florida's rule also allows a deposit to replenish a shortage, with notice to the Bar.
Putting an advance fee in operating when your state requires trust	ABA Rule 1.15(c) says advance fees go in trust and come out only as earned. California 1.15(b) lets a flat fee paid in advance go in operating if the client is told in writing that they can require the fee be deposited in trust and that they are entitled to a refund of any unearned amount. Over $1,000, the agreement and disclosure must be in a writing signed by the client.

A related mistake is paying a firm operating bill straight from trust. The Texas rule comment says a lawyer should not pay the lawyer's own general creditors directly from trust, even with money due to the lawyer.

Is commingling funds illegal?

Commingling violates the rules of professional conduct and can lead to bar discipline. Texas bar guidance names trust account errors as a common path into the disciplinary system.

Whether a particular act is also a crime depends on the facts and your state's law. I do not give legal advice, and I will not guess at criminal exposure. If you think you have a problem, talk to ethics counsel.

How is commingling different from misappropriation?

New York's Rule 1.15(a) says a lawyer holding others' funds is a fiduciary who must not misappropriate them or commingle them with the lawyer's own. The rule names both, as separate duties.

For a definition of misappropriation or how your bar treats each, ask ethics counsel.

How to avoid commingling

The rules below come from the sources listed at the end. The monthly check, the negative ledger rule, and the review step are how I work.

Keep trust and operating separate. Client funds go in a separate account held for clients, not in the firm's operating account.
Deposit receipts intact. The ABA records rules call for receipts to be deposited intact, with deposit records that identify each item.
Move the firm's share out once it is fixed. When a fee is earned or a mixed check's split is settled, transfer the firm's share to operating. California says to do it at the earliest reasonable time. A disputed portion stays in trust until the dispute is resolved.
Keep a firm ledger line for bank charge money. If the firm puts its own money in trust to cover bank charges, record it on a ledger line for the firm. The State Bar of Texas guide says the sum of all client ledgers, including the lawyer's own ledger for personal funds put in for bank fees, should equal the reconciled bank balance. Firm money with no ledger line shows up as a difference.
Run the 3 way check every month. Bank statement, trust account in the books, and the total of all client ledgers must agree. Trust passing the 3 way check is 1 of the 6 proofs in my month end close. Any gap gets explained and fixed in the same month. See 3 way reconciliation and how often to reconcile trust accounts.
Never let a client ledger go negative. I check this every close. A negative ledger means another client's money paid that client's costs. Bank and books can still match while that happens.
Have a human review before trust checks go out. A person reviews each trust check before it is released. For payouts, see the settlement disbursement statement guide.

For the full trust picture, read the pillar guide, law firm trust accounting.

What if commingling has already happened?

Take these steps in order.

Stop adding to it. Do not make more deposits or payments that mix firm and client money.
Document what happened. Write down the date, amount, account, and whose money each part was. ABA comment [2] says accurate records must show which part of the money is the lawyer's.
Correct the entries. Fix the books so each client ledger and the firm's ledger show the right balance, and tie the account out to the bank statement.
Talk to ethics counsel before moving money. The rules differ. California speaks of withdrawing the lawyer's share at the earliest reasonable time. Florida speaks of replenishing a shortage with immediate notice to the Bar.
Confirm at the next 3 way check. Bank, books, and client ledgers should agree, with any difference explained in the same month.

I work on the books side. I cannot promise how a bar will view the facts, and nothing here is a legal promise.

FAQ

Can I keep extra firm money in trust as a cushion?

Only enough to pay bank service charges on the account. Under the ABA model rule, lawyer funds may go in the trust account only for that purpose, and only in the amount needed. California and New York also allow funds reasonably sufficient for bank or account charges.

What if a check is partly mine?

That is a mixed funds deposit. California says the lawyer's share must be withdrawn at the earliest reasonable time once it becomes fixed, and a disputed portion stays until the dispute is resolved. New York says the lawyer's portion may be withdrawn when due, unless disputed. Check your own state's rule.

Is commingling the same as stealing?

No. New York's Rule 1.15(a) lists commingling and misappropriation as 2 separate duties a lawyer must not breach. Ask ethics counsel how your state treats a specific situation.

What happens if the bar finds it?

The sources do not list outcomes, so I will not guess. Florida requires lawyers to authorize their trust bank to notify the Bar of an overdrawn account or a bounced trust check. California requires licensees to register trust accounts annually and certify compliance. If you are worried, speak to ethics counsel.

Trust account rules vary by state. This guide explains common practice under the ABA Model Rules. Check your state bar's rules, and treat this as general information, not legal advice.

Commingling Client Funds: What It Means, Examples, and How to Avoid It