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Operating trust accounts

Who can operate a trust account?

A general trust account must be operated by the principal of a law practice. For example a:

• sole practitioner
• partner (if operating in a partnership)
• legal practitioner director (if operating in an incorporated legal practice).

Can anyone else operate a trust account?

Other persons such as the employed legal practitioner, a legal practitioner with an unrestricted Practising Certificate or two employees jointly of the law practice may be authorised in the absence of the principal to operate the general trust account provided they are authorised by the law practice.

Under Clauses 65(3) and 66(2) of Legal Profession Regulation 2005, if a principal of the law practice is not available to sign a trust cheque or effect an electronic funds transfer, then he or she may authorise any of the following to operate the trust account:

• An authorised legal practitioner associate (e.g. employed legal practitioner).
• An authorised Australian legal practitioner who holds an unrestricted Practising Certificate.
• Two or more authorised associates jointly (e.g. employed bookkeeper or practice manager). The definition of ‘associate’ can be found in section 7(1) of the Legal Profession Act 2004.

Does delegation of authority require notification?

A law practice is no longer required to seek permission from the Law Society to authorise delegates to sign a trust cheque and/or effect an electronic funds transfer.

However, a law practice must notify the Law Society in writing before or within 14 days after authorising or terminating the authority of an associate or an Australian legal practitioner to disburse trust money (Clause 74(3)(a)). The notification should include the names, addresses and occupation of the authorised delegates.

In addition, the law practice is required to give the Law Society written notice of the associates or Australian legal practitioners (including their names and addresses) who are authorised as at 1 July of that year to sign trust cheques or to effect an electronic funds transfer (Clause 74(3)(b)).

How must notification be made?

It is recommended that the authorisation to the appropriate persons be made in writing. The original of this authority is normally sent to the bank and the copy retained by the law practice.

The notification procedures that should be followed when authorising persons to operate the trust account are:

1. The law practice must give a written notice to the Law Society in relation to the authorisation (or revocation of authorisation).
2. Annual notices (as at 1 July each year) must be sent to the Law Society notifying details of persons authorised to operate the general trust account; the notice should arrive at the Law Society before the end of July.

The Trust Accounts Department has prepared a series of forms for law practices to provide written notice in accordance with these regulations. Go to the Notification forms section of this website.

More information

For more detailed information about operating trust accounts under the Legal Profession Act 2004, see the Department's Frequently Asked Questions.