AU
AU
Who can operate a trust account?
A general trust account must be operated by the principal of a law practice who is authorised to receive trust money. For example a:
sole practitioner
partner (if operating in a partnership)
legal practitioner director (if operating in an incorporated legal practice)
Can anyone else operate a trust account?
Other persons such as an employed legal practitioner, an Australian legal practitioner with an unrestricted practising certificate, or two or more employees jointly of the law practice may be authorised in the absence of the principal to operate the general trust account provided they are authorised by the law practice.
Under Rule 43(2) of theLegal Profession Uniform General Rules 2015, if a principal of the law practice is not available to sign a trust cheque or effect an electronic funds transfer, then he or she may authorise any of the following to operate the trust account:
An authorised legal practitioner associate (e.g. employed legal practitioner)
An authorised Australian legal practitioner who holds an Australian practising certificate authorising the receipt of trust money
Two or more authorised associates jointly (e.g. employed bookkeeper or practice manager). The definition of 'associate' can be found in s 6 of theLegal Profession Uniform Law (NSW)
Does delegation of authority require notification?
A law practice is no longer required to notify the designated local regulatory authority -the Law Society -of the appointment or termination of an authorised signatory.
The law practice is required to give the Law Society written notice of the associates or Australian legal practitioners (including their names and addresses) who are authorised as at 1 July of that year to sign trust cheques or to effect an electronic funds transfer. See Rule 50(2) which reads:
"During July in each year, a law practice is required to give the designated local regulatory authority written notice of the associates and Australian legal practitioners (including their names and addresses) who are authorised, as at 1 July in that year:
(a) to sign cheques drawn on a general trust account of the practice; or
(b) otherwise to effect, direct or give authority for the withdrawal of money from a general trust account of the practice;
except to the extent that this information has already been provided (or that the law practice reasonably expects to be included) in an external examiner's report under s 159 of the Uniform Law".
How mustauthorisations be made?
It is recommended that the authorisation to the appropriate persons be made in writing. The original of this authority is normally sent to the bank and the copy retained by the law practice.
Significant cash transaction report
Under the Legal Profession Uniform Law (NSW) and the Legal Profession Uniform General Rules 2015, a law practice is required to have its trust records externally examined once in each financial year if it has received or held trust money, excluding transit money.
An external examination covers a law practice's trust records from the beginning of April to the end of March in the following year. A report on the examination must be lodged with the Law Societyby 31 May each year.
External Examiner's Report - Online Lodgement System
Relevant legislation
To view the legislative basis for this requirement, see:
Legal Profession Uniform Law (NSW)- Chapter 4 Business practice and professional conduct, Part 4.2 Trust money and trust accounts, Division 3 External examinations of trust records.
Legal ProfessionUniformGeneral Rules 2015- Chapter 4 Business practice and professional conduct, Part 4.2 Trust money and trust accounts, Division 4 External examinations.
Information for legal practices
Notification
Law practices are required to notify the Law Society of the person appointed as their external examiner and must also notify the Law Society when they terminate an appointment.
To notify the Law Society complete theNotification of appointment orcessation of external examiner formand return it completed to the Trust Accounts Department. Further, prior to terminating the appointment of an external examiner the law practice is required to seek the approval of the designated local regulatory authority - the Law Society. To request approval complete theRequest for Approval for Termination of External Examinerform.