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Practising without trust account certification due

07 March 2016

Law practices which have elected not to operate a trust account are being reminded that they need to complete their annual certification requirements.

The New Zealand Law Society has contacted all such practices and is reminding them of the action they must take by 31 March 2016.

All law practices that elect under section 317 of the Lawyers and Conveyancers Act 2006 not to operate a trust account are required to complete and return their section 112(2) certification annually.

Under regulation 4 of the Lawyers and Conveyancers Act (Trust Account) Regulations 2008, every practice which relies on section 112(2) must certify in writing to the Law Society, not later than 31 March each year, that it:

  • has not done any of the things specified in section 112(2)(b) of the Act during the preceding 12 months; or
  • does not intend to do any of those things during the following 12 months.

Completed certificates must be returned to the Law Society no later than 31 March 2016 if the practice wishes to continue to rely on section 112(2) in relation to the obligation to keep records in respect of trust accounts and valuable property.

If a practice is no longer entitled to rely on section 112(2) it must notify the Law Society immediately and revoke the election made under section 317(1).  Requirements in relation to this revocation are contained in section 318.

If a practice has not previously been entitled to rely on s112(2) but now meets the requirements it can complete the combined certification and election form available on the Practice without a trust account section or contact the Law Society's Registry on 0800 22 30 30. In doing so, the practice should have regard to the "deeming" provisions of section 110(3) in relation to receiving money. A practice cannot rely on section 112(2) if fees or disbursements are received in advance.
A lawyer (or practice) will be "deemed" to have received money belonging to another person if:
  • that person, or a bank or other agency acting for, or on behalf of that person, deposits funds by telegraphic or electronic transfer into the bank account of the lawyer or practice; or a person or body related to the lawyer; or
  • a lawyer or incorporated practice takes control of money belonging to that person.

As couched, the provisions will catch lawyers using third party trust accounts or dealing with funds electronically.

The New Zealand Law Society advises anyone with queries as to whether they are entitled to rely on section 112(2) to contact the Law Society Inspectorate on 04 463 2916 or to email lisa.attrill@lawsociety.org.nz.

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Last updated on the 11th March 2016