Has My Attorney Misappropriated Funds?

When you hire an attorney, you trust them to handle your legal matters with professionalism and integrity. However, if you suspect that your lawyer has misappropriated funds, it is essential to take immediate action. Misappropriation of client funds—whether through improper billing, failure to disburse settlement money, or outright theft—is a serious ethical violation that can lead to disbarment and criminal charges. In this guide, we’ll outline how to recognize financial misconduct, what steps to take, and how to protect yourself.

Signs That Your Attorney May Have Misappropriated Funds

Misappropriation of client funds can take many forms, and common warning signs include:

• Unexplained Delays in Receiving Settlements – If your attorney has received a settlement from the opposing party but has not disbursed your share within a reasonable timeframe, it could indicate financial misconduct.
• Lack of Transparency in Billing – Inflated invoices, duplicate charges, or vague descriptions of services rendered may suggest unethical billing practices.
• Missing Client Funds from a Trust Account – Lawyers must keep client funds in a separate trust account. If your attorney is unable to account for your money, they may be misusing client funds.
• Avoiding Communication About Financial Matters – If your lawyer refuses to provide detailed billing records or avoids discussing settlement funds, it may indicate improper conduct.
• Requests for Payments That Seem Unusual – Demands for cash payments, wire transfers to personal accounts, or unauthorized deductions from settlements should raise red flags.

Step 1: Review Your Retainer Agreement and Billing Statements

Your retainer agreement outlines the attorney’s obligations, including how legal fees and client funds are handled. Carefully review:

• Payment terms and fee structures
• Trust account provisions (if applicable)
• Statements of account or invoices

Compare the amounts you have paid with the services rendered. If something appears suspicious, request an itemized billing statement from your attorney.

Step 2: Request a Formal Accounting of Your Funds

You have the right to ask your lawyer for a detailed accounting of any funds held on your behalf. Submit a written request for:

• A breakdown of funds received and disbursed
• Copies of settlement checks or trust account transactions
• Any outstanding balances or deductions made

If your attorney refuses to provide this information or gives vague responses, it could indicate financial mismanagement.

Step 3: Contact a Legal Malpractice Attorney

If you suspect funds have been misappropriated, consult an experienced legal malpractice attorney to assess your options. A new attorney can:

• Review financial records and determine if wrongdoing has occurred
• Advise on recovering stolen or misused funds
• Help file complaints with disciplinary authorities

Taking legal action early can help mitigate financial losses and hold the responsible attorney accountable.

Step 4: File a Complaint with the State Bar Association

Misappropriating client funds is a serious ethical violation under the American Bar Association (ABA) Model Rules of Professional Conduct. If you believe your lawyer has acted improperly, you can file a complaint with your state’s bar association.

When submitting a complaint, provide:

• Documentation of financial transactions
• Correspondence with your attorney regarding funds
• Retainer agreements, invoices, and settlement records

The bar association will investigate the complaint, and if misconduct is found, your attorney could face disciplinary action, suspension, or disbarment.

Step 5: Consider Legal Action for Financial Recovery

If your lawyer has stolen or misused your funds, you may be able to file a civil lawsuit for financial recovery. Potential remedies include:

• Legal Malpractice Claims – You can sue for damages caused by your attorney’s negligence or misconduct.
• Restitution from the State Bar Client Security Fund – Some state bar associations maintain client protection funds that reimburse victims of attorney theft.
• Criminal Charges – In extreme cases, misappropriation of funds may warrant criminal prosecution, leading to penalties such as fines or imprisonment.

Your new attorney can guide you through the legal options available to recover lost funds.

What You Can Do

If you suspect that your lawyer has misappropriated your funds, it is crucial to act quickly. Reviewing your financial records, requesting an accounting, consulting a legal malpractice attorney, and filing a bar complaint can help protect your rights. Attorneys who engage in financial misconduct can face serious legal and professional consequences, and taking action can prevent further harm.

We Can Help

If you believe your attorney has misused client funds, don’t wait—contact our experienced legal malpractice attorneys today for a confidential consultation. We will help you investigate the situation, protect your assets, and seek financial recovery.