A paymaster receives the money from a transaction and pays each person who is owed a share of it. An attorney paymaster is a licensed lawyer who does this for a client, through the law firm's client trust account, under a written agreement.

Why parties use a paymaster

Large commodity and business transactions often involve a chain of people: a seller, a buyer, mandates on each side, and brokers who introduced them. Each expects to be paid when the deal closes. Without a paymaster, the seller must pay everyone directly, and every broker must trust that the seller will. A paymaster gives everyone one documented place where the funds arrive and from which payments are made according to signed instructions.

Why an attorney

A California attorney must keep client money in a separate trust account, keep detailed records of every deposit and payment, and account to the client. These duties come from Rule 1.15 of the California Rules of Professional Conduct and are overseen by the State Bar of California. The attorney is also bound by duties of confidentiality and loyalty to the client.

Who the attorney represents

An attorney paymaster acts for a client, usually the beneficiary who is to be paid, under a written Paymaster Agreement. The attorney does not represent the other parties to the deal, and the agreement says so. Other parties should have their own counsel.

How the process works

  1. The client contacts the attorney and describes the transaction.
  2. The attorney verifies the identity of every party and screens them against U.S. sanctions lists.
  3. The client signs the Paymaster Agreement, which names the beneficiaries and the payment terms.
  4. The paying party wires funds to the trust account after confirming the wire instructions by phone.
  5. The attorney pays each beneficiary by wire according to the signed instructions and confirms the payments in writing.

What a paymaster does not do

A paymaster does not guarantee that a deal will close, does not check the quality or existence of goods, and is not a bank or escrow company. Its job is narrow: receive the funds, account for them, and pay them as the signed agreement provides.

This article is general information, not legal advice for your situation, and does not create an attorney client relationship. Laws change; please consult an attorney about your own transaction.