Trust Accounting

Chief Executive of the Department of Justice and Attorney-General.

It should be noted that the Law Practice Statutory Declaration & Trust Money Statement (QLS Form 4 LPR) (which is to be completed by law practices and provided to external examiners at the commencement of the final examination does require law practices to state whether funds were disbursed by EFT and whether they have complied with the Society's EFT Guidelines).

If an External Examiner noted during his examination that trust funds were disbursed by a law practice and the law practice's statement stated that it had not disbursed funds by EFT, then the External Examiner would report this at Item 2 of the External Examiner's Report (QLS Form 5 (LPR)).

The decision as to whether the External Examiner should sight the letter of approval from QLS is a decision to be made by the External Examiner.

No, you are required pursuant to s46 of the Legal Profession Regulation 2017 (LPR) to notify the Society within 14 days of opening a new trust bank account.  The notification should include the name of the ADI, branch, account number and account name of the new trust account.

All new trust accounts opened after 1 July 2007 (pursuant to s33(2) of the LPR must:

1. be kept with an approved ADI;
2. be kept within this jurisdiction (Queensland);
3. include within the name of the account the name of the law practice or business name under which the law practice engages in legal practice; and
4. include within the name the expression “law practice trust account” or “law practice trust a/c”.

An ADI is defined (Schedule 2 Dictionary - Legal Profession Act 2007) as an authorised deposit-taking institution within the meaning of the Banking Act 1959 (Cwlth).

An approved ADI is an ADI that has entered into an arrangement with the Chief Executive in respect to the payment of interest to the Department of Justice and Attorney-General.

A list of Approved ADI can be located on the Society’s website on the trust account page.

Pursuant to s249 Legal Profession Act 2007 (LPA), a law practice must disburse the trust money only under a direction given by the person on whose behalf it is held.

Therefore if a dispute as to the ownership of funds held in your trust account arises, the suggested approach to be taken is as follows:

1. If you believe that one of the parties is entitled to the money held in your trust account, issue a letter to the other party advising them that you propose to pay the money to that person upon the expiry of a stipulated period (say - 1 month) and if they wish to prevent you from doing that, they should make an application to the Court seeking an Order.
2. If you are not sure who is entitled to the money, you should advise all parties that you will continue to retain the money in your trust account until they instruct you how to disburse the money (in writing) or an order is made by the Court directing you how to disburse the money.
3. If there is no agreement (in writing) or Court order within 2 years, you can lodge a return with the Public Trustee seeking a direction to pay the money to the Public Trustee pursuant to s713(2) of the LPA. If you do that, you should advise all parties that you have lodged a return and if you receive instructions from the Public Trustee to pay the money to them, all parties will have to liaise with the Public Trustee to recover the money.

It should be noted that option (iii) above does not result in the possibility of trust funds being paid to an incorrect party. The previous provisions under the Trust Accounts Act 1973 could have resulted in a law practice disbursing funds from the trust account to an incorrect party, which may have resulted in civil proceedings against the law practice.

Legal costs means remuneration and disbursements incurred in relation to legal work.   Disbursements includes outlays.  There are three options for doing this.

The first option is that a law practice may withdraw trust money held in the general trust account or controlled money account for the payment of legal costs owing to the law practice, if the law practice has given the person a bill relating to the money [s58(2) of the Legal Profession Regulation 2017 (LPR)] AND;

•  the person has not objected to the withdrawal of the money within 7 days after being given the bill, or
• the person has objected within 7 days after the bill was given, however has not applied for a costs assessment within 60 days after being given the bill, or
• the money otherwise becomes legally payable.

 The second option is that the law practice may also withdraw trust money in accordance with [s58(3)(a) of the LPR]:

• a costs agreement that complies with the legislation and that authorises the withdrawal, or
• instructions that have been received by the law practice and that authorise the withdrawal.  If written, they must be retained as a permanent record.  If not written, they must be put in writing within five days after effecting the withdrawal and retained as a permanent record, AND

before effecting the withdrawal the law practice gives or sends to the person a request for payment, referring to the proposed withdrawal or a written notice of withdrawal [s58(3)(b) of the LPR].

The third option is that the law practice may also withdraw trust money if:

• the money is owed to the law practice by way of reimbursement of money already paid by the law practice on behalf of the person [s58(4)(a) of the LPR], AND

before effecting the withdrawal the law practice gives or sends to the person a request for payment, referring to the proposed withdrawal or a written notice of withdrawal [s58(4)(b) of the LPR].

Schedule 2 of the Legal Profession Act 2007 defines ADI to mean an authorised deposit-taking institution within the meaning of the Banking Act 1959 (Cwlth).

Below is an extract from the Trust Account Guide (which can be downloaded from the Society’s website at www.qls.com.au) - item 3.1 Establishing a General Trust Account.

An “approved ADI” is an ADI (Authorised deposit-taking institution) approved under section 280 by the Chief Executive of the Department of Justice & Attorney General [Legal Profession Act 2007 s237].  A list of approved ADls can be found on the Society’s website at www.qls.com.au.

Each jurisdiction has agreed that a “relevant account” means the law practice’s general office bank account or law practice credit card.

The regulations do not require a law practice to maintain a register of trust account receipt forms.  However, it is recommended, as a form of internal control that a register of receipt forms be kept to record the serial numbers of all trust account receipt forms supplied to the law practice by the law practice's printer.  The serial numbers of trust account receipt forms issued to office staff for normal daily requirements should also be recorded in the register.  Trust account receipt forms not issued to office staff should be kept in a secure location.

A suggested register of receipt forms follows:

Register of receipt forms

Below is an extract from the Trust Account Guide (which can be downloaded from the Society's website at www.qls.com.au) – item 4.3.11 Register of receipt form:

The new regulations do not require a law practice to maintain a register of trust account receipt forms.  However, it is recommended, as a form of internal control, that a register of receipt forms be kept to record the serial numbers of all trust account receipt forms supplied to the law practice by the law practice's printer.  The serial numbers of trust account receipt forms issued to office staff for normal daily requirements should also be recorded in the register.  Trust account receipt forms not issued to office staff should be kept in a secure location.

No, there is no provision that requires a law practice to issue general account receipts in respect to funds received to the general account.

Prior to 1 July 2007, law practices were required to issue general account receipts in respect of all money received via proper serially machine numbered receipts pursuant to Rule 91 of Legal Profession (Solicitor) Rules 2006.  The Legal Profession (Solicitor) Rules 2006 were repealed on 30 June 2007.

Pursuant to s37(2)(a) of the Legal Profession Regulation 2017 (LPR) a trust account cheque form must be made payable to or to the order of a stated person or persons and not to bearer or cash.

Therefore law practices should ensure that their trust account cheque forms are pre-printed with a direction to pay to order (of a stated person) and that they should be crossed ‘not negotiable’ [s37(2)(b) of the LPR].

No - law practices only need to notify the Society within 14 days that they have authorised another legal practitioner or employee as signatories to their general trust account/controlled money accounts.

Note: Employees who are non-legal practitioners must sign jointly with another employee.

Interpretation of s37(3) and s38(2) of Legal Profession Regulation 2017 (LPR) is as follows:

1. An authorised principal of the law practice may solely sign trust account cheques drawn on the law practice general trust account.
2. If the principal mentioned in 1 is not available:
   1. An authorised Australian legal practitioner (employed solicitor), irrespective of whether the employed solicitor holds an Unrestricted Practising Certificate or a Restricted Practising Certificate, can be authorised solely as a signatory to the law practice general trust account.
   2. An authorised Australian legal practitioner holding an Unrestricted Practising Certificate can be authorised solely as a signatory to the law practice general trust account irrespective of whether he/she is employed by the law practice.
   3. Any two (2) or more authorised associates (including non-solicitors) can be authorised jointly to sign trust account cheques drawn on the law practice general trust account.
   4. The holder of a Restricted Practising Certificate can only be authorised as a signatory to a law practice general trust account if they are employed by the law practice and cannot be appointed jointly with another person as a signatory.