What are client funds?

• A. Money belonging to the firm.
• B. Money belonging to the client (e.g., retainers, settlement proceeds) that must be kept separate from the law firm's operating funds, typically in a Trust Account, to prevent commingling.
• C. Income from cases.
• D. Funds used to pay staff salaries.

Answer: (B)

Client funds are money that belongs to the client and is held for the client’s benefit during the course of representation. This includes retainer payments and settlement proceeds that have not yet been paid out. These funds must stay separate from the law firm’s operating money and are placed in a dedicated Trust Account to prevent commingling, ensure proper accounting, and keep the client’s money available as needed. The reason this is the best answer is that it captures both who the money belongs to and how it must be safeguarded.

The other options describe money that is not the client's: money belonging to the firm refers to the firm’s own operating funds; income from cases is revenue earned by the firm; and funds used to pay staff salaries are operating expenses.