Legal Profession Act 2004, Chapter 3

244. Money involved in financial services or investments
Money that is entrusted to or held by a law practice for or in connection with a financial service provided in circumstances where the practice is required to hold an Australian financial services licence covering the provision of the service or in circumstances where the practice provides the service as a representative of another person who carries on a financial services business is not trust money for the purposes of this Act.

245. Determinations about status of money
The Council may determine that the money is or is not trust money.

246. Application of Part to law practices and trust money
Generally applies to practices whether or not trust money was received inside or outside jurisdiction.

247. Protocols for determining where trust money is received

248. When money is received
A law practice receives money when the practice obtains possession or control of it directly, or the practice obtains possession or control of it indirectly as a result of its delivery to an associate of the practice, or the practice, or an associate of the practice (otherwise than in a private and personal capacity), is given a power to deal with the money for or on behalf of another person.

249. Discharge by legal practitioner associate of obligations of law practice
• the establishment of a trust account,
• the maintenance of a trust account,
• the payment of trust money into and out of a trust account and other dealings with trust money,
• the maintenance of trust records,
• engaging an external examiner to examine trust records,
• the payment of an amount into an ADI account as referred to in section 283 (Statutory deposits),
• an action of a kind prescribed by the regulations.

250. Liability of principals of law practice
Principles are jointly and severally liable

251. Former practices, principals and associates
Former principles are jointly and severally liable for the time they were there

252.    Barristers not to receive trust money
A barrister is not, in the course of practising as a barrister, to receive trust money

253. Maintenance of general trust account
A law practice that receives trust money must maintain a general trust account in this jurisdiction and this general trust account must be established and maintained in accordance with the regulations. The practice can maintain more than one general trust account

254. Certain trust money to be deposited in general trust account
Subject to section 258A, a law practice must deposit the money in a general trust account of the practice ASAP unless:
• the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or
• the money is controlled money, or
• the money is transit money, or
• the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person.

255. Holding, disbursing and accounting for trust money
A law practice must hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and disburse the trust money only in accordance with a direction given by the person

The direction by the person on whose behalf the money is held does not have to be in writing, however it is considered prudent practice that the law practice develop suitable office procedures.

255A. Manner of withdrawal of trust money from general trust account
A law practice must not withdraw trust money from a general trust account otherwise than by cheque or electronic funds transfer.

256. Controlled money
The law practice must maintain a controlled money account and must not disburse the money except in accordance with the written direction mentioned in that subsection, or a later written direction given by or on behalf of the person on whose behalf the money was received.

256A. Manner of withdrawal of controlled money from controlled money account
A law practice must not withdraw controlled money from a controlled money account otherwise than by cheque or electronic funds transfer.

257. Transit money
Subject to section 258A, a law practice that has received transit money must pay or deliver the money as required by the instructions relating to the money within the period (if any) specified in the instructions, or subject to paragraph (a), as soon as practicable after it is received.  The law practice must account for the money as required by the regulations.

It must be noted that transit money received in cash must be deposited into the general trust account of the law practice or an existing controlled money account before the money is otherwise dealt with in accordance with the instructions relating to the money

258. Trust money subject to specific powers

258A. Trust money received in the form of cash
General trust money: A law practice must deposit general trust money received in the form of cash in a general trust account of the practice unless instructed to do otherwise. 

Controlled money received in the form of cash must be deposited in a controlled money account in accordance with section 256.

Transit money A law practice must deposit transit money received in the form of cash in a general trust account of the practice before the money is otherwise dealt with in accordance with the instructions relating to the money.

Trust money subject of a power A law practice must deposit trust money that is received in the form of cash and is the subject of a power in a general trust account (or a controlled money account in the case of controlled money) of the practice before the money is otherwise dealt with in accordance with the power.

General trust money means trust money, other than:
(a) controlled money, and
(b) transit money, and
(c) money that is the subject of a power.

259. Protection of trust money
Money standing to the credit of a trust account maintained by a law practice is not available for the payment of debts of the practice or any of its associates nor is it liable to be attached or taken in execution for satisfying a judgment against the practice or any of its associates.

260. Intermixing money
A law practice must not, otherwise than as permitted by subsection (2), mix trust money with other money.  Sub section (2) provides that a law practice is permitted to mix trust money with other money to the extent only that is authorised by the Law Society.

261. Dealing with trust money: legal costs and unclaimed money
A law practice may do any of the following, in relation to trust money held in a general trust account or controlled money account of the practice for a person:
• exercise a lien, including a general retaining lien, for the amount of legal costs reasonably due and owing by the person to the practice,
• withdraw money for payment to the practice’s account for legal costs owing to the practice if the relevant procedures or requirements prescribed by this Act and the regulations are complied with,
• after deducting any legal costs properly owing to the practice, deal with the balance as unclaimed money under section 266 (Unclaimed money).

262. Deficiency in trust account
An Australian legal practitioner is guilty of an offence if he or she, without reasonable excuse, causes (which includes be responsible for):
• a deficiency (either non inclusion or exclusion) in any trust account or trust ledger account, or
• a failure to pay or deliver any trust money.

263. Reporting certain irregularities and suspected irregularities
The practitioner or associate must inform the Law Society Council and corresponding authority where:

• If a legal practitioner associate of a law practice becomes aware that there is an irregularity in any of the practice’s trust accounts or trust ledger accounts OR
• An Australian legal practitioner believes on reasonable grounds that there is an irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice

There is no liability for a defamatory complaint.  For example if a trust account cheque bounces must report it.

264. Keeping trust records
A law practice must keep in permanent form trust records in relation to trust money received by the practice:
• in accordance with the regulations, and
• in a way that at all times discloses the true position in relation to trust money
• in a way that enables the trust records to be investigated or externally examined
• for a period determined in accordance with the regulations (7 years).

265. False names
A law practice must not knowingly receive money or record receipt of money in the practice’s trust records under a false name and if a person is commonly known by more than one name, the practice must ensure that the practice’s trust records record all names by which the person is known.

266. Unclaimed money
If a law practice holding money in a trust account cannot find the person on whose behalf the money is held or a person authorised to receive it, the practice may:
• pay the money to the Treasurer for credit to the Consolidated Fund, and
• provide the Treasurer with such information as the Treasurer requires in relation to the money and the person on whose behalf the money was held by the practice.

If a law practice pays money to the Treasurer under subsection (1), the practice is relieved from any further liability in relation to the money.

The Treasurer must pay money deposited under this section to a person who satisfies the Treasurer as to his or her entitlement to the money.

Bridges
Partner stole and used monies. The Partner convinced Bridges that everything could be fixed so Bridges did nothing.  Guilty of professional misconduct and struck off

Jones
How should one view conduct amounting to financial dishonesty.  Need for reliability and integrity in the handling of trust funds.

(d) Regulations

• Riley