Frequently Asked Questions
My client has brought in $10,000 cash as part of the purchase funds for his property transaction. Can I accept this?
Rule 15 defines cash transactions and limits members to receiving or accepting cash transactions to $7,500, except in circumstances specified in rule 15.02(4). The exceptions under Rule 15.02(4) are as follows:
15.02(4) Notwithstanding rule 15.02(3), rule 15.02(1) does not apply when the member, (a) receives cash from a financial institution or public body;
(b) receives cash from a peace officer, law enforcement agency or other agent of the Crown (acting in his or her official capacity);
(c) receives cash pursuant to a court order, or to pay a fine or penalty; or
(d) receives cash of $7,500 or more for professional fees, disbursements, expenses or bail, provided that any refund out of such receipts is also made in cash.
Members are required to insist on a bank draft or certified cheque in this instance.
My personal injury client is in dire financial straits and is in need of immediate funds. Am I allowed to loan them some money which will be repaid once their settlement is received?
Members are permitted to loan money to clients in certain circumstances, however all such loans must be approved by Benchers. Please contact Pamela Marks at the Law Society for the procedure and documentation to make an application to Benchers. For your reference, Rule 5.11 outlines the regulatory requirements.
An error has occurred in my trust account. Do I need to report this to the Law Society?
Rule 5.05(1) sets out the reporting requirements with respect to overdrafts in a trust account. It is recommended, however, to report all irregularities with respect to your trust account to the Executive Director of the Law Society. Your correspondence will be provided to the Law Society auditor for review and placed on your firm’s trust file for inclusion in the firm’s next audit file.
What is a specific trust account and when do I need to set one up?
The Law Society Rules define a specific trust account as: “specific trust account” means a separate deposit account or instrument in a financial institution authorized by law to receive money on deposit, maintained by a member on behalf of a specific client, and designated as a trust account on behalf of that client, into which the member deposits money received in trust, at interest that is, and is intended to remain, the property of the client;
Essentially, specific trust accounts are set up for large amounts of funds that will be on deposit more than 30 days. The deposit account established at a financial institution in accordance with the Society’s rules must be denoted as “lawyer’s name In Trust for client’s name”. Any interest earned on the account is property of the client and should be paid to him/her. Additionally, any income tax due on the interest earned on a specific trust account is the responsibility of the client. The lawyer must ensure that the financial institution prepares the T5 in the name of the client.