Trust account management
To run a lawyer’s trust account, you must be in practice on your own account as a barrister and solicitor, and meet the criteria around the training requirements.
The Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (the ‘Regulations’) cover:
- the duties of practices in regard to trust accounts and clients’ money, and restrictions on their use
- trust account records required to be kept
- trust account supervisors, their reporting and training requirements
- practitioners' trust accounts - audit restrictions
- functions and powers of the Inspectorate
- investigations of affairs of practices
- contributory mortgages.
Training in Trust Account Supervision
The Trust Account Supervisor (TAS) course requirements are included as schedules to the regulations. The course is administered by NZLS CLE Ltd. Please refer to www.lawyerseducation.co.nz for further information regarding the course. NZLS CLE Ltd also runs a Trust Account Administrator course.
If you have previously completed the TAS course, you may wish to refer to Regulation 19(3) Lawyers and Conveyancers (Trust Account) regulations 2008 to assess whether you are eligible to complete only a ‘refresher’ course. For further information about refresher requirements please email firstname.lastname@example.org
Lawyers Trust Accounting Guidelines
The Lawyers Trust Account Guidelines are intended to assist lawyers with providing a system for handling client money and valuable property, and for administering trust accounts in law practices. They include all requirements introduced by the Lawyers and Conveyancers Act 2006 (‘LCA’) and the LCA (Trust Account) Regulations 2008 (Regulations).
The Inspectorate Risk Framework
The framework covers all lawyers who provide regulated services except those who, on their own behalf or as directors or shareholders of an incorporated firm, do not:
- receive or hold money or other valuable property in trust for any person; or
- invest money for any other person; or
- have a trust account; or
- receive fees or disbursements in advance of an invoice being issued.
The objectives of the framework are:
- ensuring compliance with the act, regulations and any practice rules;
- detecting theft or behaviour likely to result in loss of client money;
- discouraging improper practices in the handling of money entrusted to lawyers;
- demonstrating there is an effective framework in place.
Inspections or reviews
All lawyers practising on own account and operating a trust account will be visited by a member of the Inspectorate. The Inspectorate uses a risk-based framework to determine the frequency of visits.
The cost of an Inspectorate visit is funded by an annual Inspectorate fee. However, if further visits are required and/or other remedial work needs to be undertaken, then the cost of these visits may be charged to the practice.
The Inspectorate also supports the work of the Lawyers Complaints Service, undertaking investigations on an as required basis.
In carrying out inspections (also known as reviews), the primary focus is on the trust accounting procedures and controls of firms. Inspectors may also check general compliance with the regulations and any rules, such as the LCA (Lawyers: Conduct and Client Care) Rules 2008 and LCA (Lawyers: Nominee Company) Rules 2008.
Barristers and trust accounts
Barristers cannot receive or hold money or other valuable property for or on behalf of another person as they are not permitted to operate a trust account. Accordingly, barristers cannot hold fees in advance as these are deemed to be trust funds until such time as an invoice is issued for work and services undertaken.
Fees paid in advance must either be:
- held by the instructing solicitor who must operate a trust account. The solicitor holds such funds in the trust account in the name of the client and subject to the client’s instructions at all times; or
- Held in accordance with the terms of an escrow agreement.
Last updated on the 9th October 2018