The trust year will end on Thursday 31 March 2022.
Now is the time to contact your External Examiner and ensure that your trust account records, including reconciliations, are up to date and make arrangements to undertake your law practice’s annual trust account examination.
In 2021, an unprecedented amount of law practices were unable to comply with their trust account obligations. Although this was, in part, attributable to the difficulties in operating a law practice with COVID restrictions in place, it is still imperative that trust money is properly recorded and accounted for.
In 2021, we observed the following common problems:
- A significant number of law practices failed to advise us of trust deficiencies and irregularities. You must provide written notice of irregularities in your trust accounts to us as soon as practicable after becoming aware of the irregularity. For instances where the trust deficiency or irregularity is significant (for example, a payment is misdirected) and you don’t notify us, it will result in a trust account investigation.
- A large number of law practices did not issue trust statements to all their clients at 30 June. This requirement is an important part of the obligations of law practices to provide transparent and proper accounting of how money entrusted to law practices is being dealt with.
- Controlled Money Account (CMAs) registers were not updated, complete and compliant. It is important CMAs use the correct naming convention and interest is accurately recorded.
- Law practices did not provide accurate reconciliations of trust accounts. Reconciliations need to be undertaken on the last day of every month, finalised and printed and reviewed by a Principal with trust account authority. This is important to ensure all client trust monies are accounted for and there is no missing monies in the client ledger.
- Funds were withdrawn for legal costs before or immediately after invoices are raised for costs, potentially breaching Uniform General Rule 42
For further information regarding the above points please refer to Part 4.2 of the Uniform Law and Uniform General Rules.
If you are a Principal with trust authority you are responsible for your Practice’s trust account. It is vital that you are able to give an accurate accounting of your handling of the money entrusted to you.
A failure to comply with your trust account obligations may, at best, result in delays with your Practicing Certificate being renewed while we examine your accounts. It will also result in a trust account investigation.
By ensuring that you dedicate the proper time, attention and resources to your trust account obligations you can avoid these adverse outcomes to your practice and your clients.
If you have any concerns about your trust account record keeping or obligations, you can contact the LIV Trust Account Consult Service.