Why fees touch a trust account at all
South Carolina and North Dakota rules let lawyers cover two fee types from a client trust account with their own money. If your business takes card or ACH payments, the money usually lands in a bank account. When that account also holds client money, the bank's fees and the payment processor's fees raise a question. Who pays them, and from which money?
For lawyers, that question has a rule attached. A client trust account is an account where a lawyer holds money that belongs to clients or to third parties. The rules that govern these accounts are set by each state, and they are not all worded the same way. Bookkeepers who support a law practice, and owners who run one, need to know which costs may come out of that account and which may not.
This post covers the two fee types addressed by the South Carolina and North Dakota rules used as examples. It uses the wording of those two rules, explains what each phrase means for day-to-day bookkeeping, and offers a routine for handling these fees. It is general information, not legal advice. Your state's rule and your state bar's ethics guidance control.
The first fee type: bank service charges
The first fee type is the service charge a bank applies to the account itself. Many banks charge maintenance or other service fees on accounts, whatever the balance and whatever payments come in. Those charges are the cost of keeping the account open, and they show up on the bank statement whether or not any card or ACH activity happened that month.
South Carolina's rule addresses this fee type directly. It says a lawyer "may deposit the lawyer's own funds in a client trust account for the sole purpose of paying service charges on that account, but only in an amount necessary for that purpose." ( South Carolina Rule 1.15)
Three parts of that wording matter for a bookkeeper.
First, the purpose is narrow. The money is deposited for "the sole purpose of paying service charges on that account." The rule does not describe a general cushion for covering whatever the firm owes. If a deposit is made, it has one stated job.
Second, the source is the lawyer's own funds. The rule describes the lawyer depositing their own money into the trust account. It does not describe moving client money to pay the bank. That distinction is the core of the rule, so your records should make it obvious which money paid which charge.
Third, the amount is limited to what is needed. The phrase "only in an amount necessary for that purpose" means the deposit should match the actual service charge. A round number picked to build a buffer does not fit that wording.
The second fee type: card and ACH payment fees
The second fee type comes from accepting payments electronically. When a client pays by credit card, or funds arrive by ACH, there can be costs attached to the transaction. These may include bank fees, card network processing costs, or a payment provider's charge for each transaction. Who bears them depends on how the payment flows and what the provider's terms say.
North Dakota's rule names this category. It says a lawyer may deposit the lawyer's own funds in a client trust account "only for the purpose of paying bank service charges and fees associated with credit card payments or electronic funds transfer payments related to that account, but only in an amount necessary for that purpose." ( North Dakota Rule 1.15)
This wording is broader than the South Carolina version in one respect. It covers fees tied to credit card payments and to electronic funds transfer payments, not only the account's service charges. Whether an ACH fee falls under the rule depends on that state's wording.
The phrase "related to that account" is also important. The fee must connect to the trust account. A card or ACH fee that belongs to the firm's operating account, or to a separate business activity, is not what this rule describes. Keep the two sets of fees apart in your books.
Notice that this rule has the same three features as the service charge rule. The money comes from the lawyer's own funds. The purpose is stated. The amount is limited to what the purpose requires.
Why the amount limit does most of the work
Both fee types share one limit: "only in an amount necessary for that purpose." That limit is what keeps the arrangement from becoming a way to move firm money into a trust account, or a way for a trust account to quietly pay firm costs.
Read closely, the phrase points toward a few habits:
- Deposit what the fee actually costs, not a larger round figure.
- Avoid large lump-sum deposits that then sit in the trust account for months.
- Do not let the fee deposit drift into a standing balance that is really the firm's money held in the trust account.
These habits follow from the wording. They are not a substitute for reading your state's rule, which may add conditions the two examples here do not contain.
What the bookkeeper's records need to show
Bookkeepers hold the records that show whether a rule was followed. If a fee was paid through the trust account, the file should answer four questions without anyone having to remember the details:
- What was the fee?
- Which statement or processor report shows it?
- Whose money paid it?
- Why was that amount the amount needed?
A clear entry for each fee deposit answers all four. If the lawyer is later asked to explain the account, the bookkeeper's file does most of the work. A missing or vague entry, by contrast, leaves the lawyer explaining from memory, and that is a weak position.
A routine that handles both fee types
A simple monthly routine covers most of the risk. It does not require special software. It requires discipline and a consistent set of categories.
Step 1: Create separate categories. Set up one category for bank service charges on the trust account and another for card and ACH payment fees on the trust account. Do not bury these inside general office expenses. Separate lines make it easy to see whether anything unusual is happening.
Step 2: Match each fee to a source. For every fee, note the bank statement line or processor report that shows it. If you cannot point to a source, you do not yet have a record.
Step 3: Size the deposit to the fee. When the lawyer's own funds are needed to cover a fee, record that deposit as the lawyer's own money, and make the amount match the fee. If the bank or processor charges less than expected, the deposit should reflect the actual charge.
Step 4: Keep client entries clean. Client payments, client disbursements, and fee deposits should never share a line. A client's record should show client money moving in and out, and nothing else. The fee deposit belongs to the lawyer's own money record.
Step 5: Reconcile every month. Compare three things: the bank statement, the payment processor's reports, and your own books. Any difference should be investigated before the month closes. Small gaps can be the first sign of a bigger problem. For a related guide, see Reconcile bank statements in software: 4 matching steps.
Step 6: Re-check the rule each year. Rules change, and bar opinions can clarify them. Put a yearly review on the calendar, and re-read the rule for the state where the lawyer is licensed.
A worked example
Consider a simple month. A client pays a bill by card, and the payment lands in the trust account. Later, a second client's payment arrives by ACH. Both payments carry a processing fee, and the bank also posts its regular service charge for the account.
The bookkeeper starts with the three records that describe that month: the bank statement, the card processor's report, and the ACH report. The bank statement shows the service charge as its own line. The card processor's report shows the fee on the first payment and the net amount it sent. The ACH report shows the fee on the second payment, and it may show it netted from the deposit or billed separately.
Next, the bookkeeper sorts each fee into the right category. The service charge goes under bank service charges on the trust account. Both processing fees go under card and ACH payment fees on the trust account. Nothing goes under general office expenses, because nothing in this month is a firm cost unrelated to the account.
Then comes the funding question. The lawyer decides whether the firm's own money will cover these fees. If it does, the lawyer makes a deposit into the trust account in the amount of the fees, and the bookkeeper records that deposit as the lawyer's own money. The client records stay untouched. Neither client's balance changes because a processing fee was paid.
Finally, the bookkeeper reconciles. The bank balance, the processor totals, and the firm's books should agree once the fee deposit and the netted amounts are recorded. If they do not agree, the difference is the first thing to investigate, before the month closes.
The example shows why separate categories and matched sources matter. Without them, the fees blur into client activity, and the lawyer has no clean answer when someone asks where the money came from.
Watch for netting and timing
Payment processors do not always handle fees the same way. Some deduct their fees from the amount they send to the account. Others bill fees separately. If fees are netted, the deposit that arrives will be smaller than the payment the client made. A bookkeeper who does not expect this may treat the gap as an error, or worse, may cover it from the wrong source to make the numbers match.
Ask the processor, in writing, how each fee is collected. Then record the gross payment, the fee, and the net deposit as three separate items. This makes the flow visible and keeps client money tied to the client's own record. For a related guide to one processor's fees, see Square processing fees: 9 fee lines by payment type.
Timing also matters. A fee may post to the account days after the payment it relates to. Reconciling monthly, rather than only at year-end, catches these timing gaps while the details are still fresh.
Where the rules can differ
South Carolina and North Dakota both allow the lawyer's own money to cover certain fees, but their wording is not identical. The South Carolina example names service charges. The North Dakota example names bank service charges and fees tied to credit card and electronic funds transfer payments. Other states may say less, say more, or address related topics such as interest and reporting in ways that affect your records.
For that reason, do not assume one state's rule applies to your practice. Find the rule in the state where the lawyer is licensed. Read the actual text, not a summary, because a summary can drop the phrase that matters most. The two phrases to look for are the purpose clause, such as "sole purpose" or "for the purpose of," and the amount clause, such as "only in an amount necessary."
If a rule in your state is silent on card or ACH fees, that silence is not permission. It means the question needs a direct answer from the bar or from the lawyer's own ethics counsel before the fee is paid through the account. If the rule is unclear on a point you need, ask for guidance before you act.
Questions to ask your bank
Your bank can answer questions that shape your records. Useful questions include:
- Which fees are charged to this trust account, and how often?
- Can the bank itemize service charges on the statement, so each one is easy to match?
- Does the bank separate card or ACH-related charges from ordinary service charges?
- Can the bank provide a copy of the fee schedule for this account type, in writing?
Get the answers in writing where possible. A written fee schedule is far easier to rely on later than a phone conversation.
Questions to ask your payment processor
Your payment processor controls much of the fee picture for card and ACH payments. Useful questions include:
- What fee applies to each transaction, and is it deducted from the deposit or billed separately?
- How are refunds, reversals, and chargebacks handled, and which fees follow them?
- What report shows the fees for each batch or day, so you can match them to the account?
- Who to contact when a deposit does not match the expected net amount?
The answers determine what your bookkeeping must capture. Processors change their terms, so ask again when the contract or pricing changes.
Questions to ask your state bar
Many state bars offer ethics guidance, and some have advisory opinions or hotlines that answer questions from lawyers. A bookkeeper should not give legal advice, but can help the lawyer frame a question. Good questions include whether a particular fee falls within the state's rule, how the amount should be determined, and what records the bar expects to see.
Bring the exact transaction details to the call: the fee, the account, the source report, and the deposit. A specific example gets a more useful answer than a general question.
Common mistakes to avoid
Several mistakes come up often when bookkeepers handle these fees. Each one is easy to prevent.
Paying fees from client money because the balance is there. The rule describes the lawyer's own funds covering these fees. A trust account balance that holds client money is not a source for the firm's costs. If the account is short, do not fill the gap with client money to keep things moving.
Depositing round amounts. A tidy figure, such as a fixed monthly transfer, may not match the actual fees. The wording of both examples points to an amount that is necessary for the stated purpose, which means the actual fee.
Blending trust and operating fees. When one category holds fees from both accounts, nobody can tell which money paid what. Keep trust-account fees separate from operating-account fees from the start.
Treating netting as a mystery. A deposit that is smaller than the payment is often a netted fee. Find out the processor's method and record it, instead of guessing.
Skipping the monthly reconciliation. Gaps that go unnoticed for a year are hard to explain. A monthly check keeps the account understandable.
A quick check before you act
Before a fee is paid through a trust account, ask yourself five questions:
- Does the state rule allow this type of fee?
- Is the fee tied to this trust account and not to the firm's operating account?
- Will the lawyer's own funds, not client money, cover it?
- Does the amount match the actual fee, and nothing more?
- Can I point to the statement or report that proves the fee, and record it cleanly?
If any answer is no, stop and get guidance. Waiting costs far less than explaining an unclear entry later.
Bottom line
Two fee types commonly come up when a client trust account also takes card or ACH payments. The first is bank service charges on the account. The second is fees tied to credit card and electronic funds transfer payments that relate to the account. Both are addressed by the South Carolina and North Dakota rules, which allow the lawyer's own money to cover them, and other states' rules must be checked. Both are limited to an amount necessary for the stated purpose.
For bookkeepers, the job is clear records. Keep separate categories, match each fee to a source, size each deposit to the actual charge, keep client entries clean, and reconcile every month. Read your state's rule, ask your bank and processor the questions above, and when a point is unclear, ask your state bar before acting.