Whether they operate a trust account or not, all solicitors have an obligation to notify the Law Society of NSW of a known or suspected irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice.
This is set out in section 154 of the Legal Profession Uniform Law (NSW) (Uniform Law). If a solicitor becomes aware, or believes on reasonable grounds, that there is an irregularity in connection with a trust account, then the solicitor must give written notice of it to the Law Society Trust Accounts Department.
Notice should be given by email to the Law Society Chief Trust Account Investigator at trust@lawsociety.com.au.
For further guidance on what may constitute a trust account irregularity, refer to our previous article on The significance of reporting trust account irregularities.
The Law Society’s Ethics Committee has also recently released guidance on this provision here: https://www.lawsociety.com.au/practising-law-in-nsw/ethics-and-compliance/ethics/FAQs.
A failure to report a trust account irregularity is conduct that may amount to unsatisfactory professional conduct or professional misconduct (s466(6) of the Uniform Law) and is also a civil penalty offence.
These rules aim to protect the public and uphold high professional standards and relies on honesty and trustworthiness of anyone associated with trust accounts.
Confirmation of Trust Money (Part A)
Regardless of whether trust money was held or received in the period 1 April to 31 March each year, a nominated principal from every law practice (known as a Trust Co-ordinator) must submit a Confirmation of Trust Money (known as a Part A) through the Law Society of NSW’s Trust Lodgement Portal by 30 April, each year.
This requirement is set out in section 54 of the Legal Profession Uniform General Rules 2015.
For guidance on what information is submitted in Part A, refer to the Law Society of NSW’s Annual Trust Compliance (Confirming and Statement of Trust Money – Part A & Part B).
Public confidence in the legal profession
All solicitors have a duty not to engage in conduct, in legal practice or otherwise, which diminishes public confidence in the administration of justice,[1] or which brings the legal profession into disrepute.[2]
At the heart of this obligation is lawful and proper trust accounting.
The rules and regulations relating to trust accounting under the Uniform Law regime aim to ensure that trust money is held by law practices in a manner that protects the interests of the client, or any other person for whom or on whose behalf the money is held.[3]
The role of the Trust Accounts Department is to ensure that law practices across NSW comply with those laws.
We encourage all practitioners seeking guidance on their trust obligations to contact the Trust Accounts Department on (02) 9926 0333 or by email: trust@lawsociety.com.au.
[1] Rule 5.1.2(i), Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015.
[2] Rule 5.1.2(ii), Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015.
[3] Section 127, Legal Profession Uniform Law (NSW).
