It is important to give yourself some lead-time to set up a trust account before you expect to use it for your first transaction. It is not as simple as opening a bank account and issuing a trust cheque the same day.
Before you can open a trust account, you must apply to the Law Society, complete the Responsible Lawyer course, and be approved. Please factor in the timing of this process when you are preparing to open your own firm. It may take two to three weeks from the time the Certificates of Completion for the Trust Safety Online Modules are received. The processing time may be extended depending on the amount of follow up required in the process.
According to Rule 119.1, if you are setting up your own practice, you must file either
- an application to be approved as a Responsible Lawyer and to operate a trust account; or
- an application for exemption from the requirement to operate a trust account.
You must maintain at least one pooled trust account and at least one general account, both in the name of the law firm, unless exempted from the requirement to operate a trust account (Rule 119.16(1)).
The Responsible Lawyer is accountable for:
- assessing risks;
- any tasks regarding the operation of the trust and general accounts that are delegated to others;
- establishing appropriate internal controls; and
- monitoring internal controls and providing a certificate to the Law Society annually attesting to the effectiveness of those controls.
The Responsible Lawyer is also accountable for the accuracy and timeliness of all reports and filings and for the monthly trust and general bank reconciliations.
Lawyers must pass the Responsible Lawyer Course and the Client Identification and Verification course administered by the Legal Education society of Alberta (LESA) to be approved as a Responsible Lawyer and can re-take the course whenever they want to refresh their understanding.
While each firm will have one Responsible Lawyer who is accountable for certain functions, every lawyer who oversees a matter has trust account responsibility for that matter.
Therefore, all lawyers must understand the trust fund accounting rules, the rules associated with protecting trust funds and property, and be aware of the controls that must be in place to protect trust money and property.
There are special rules that allow you to pay unclaimed trust money to the Law Society, and ultimately to the Alberta Law Foundation. We understand that law firms occasionally hold trust money for extended periods of time when they cannot locate the clients or other parties to whom the money belongs. A firm may apply to pay the money to the Law Society to act as custodians, if trust money have been held for over two years and the owners cannot be located despite the firm’s reasonable attempts to locate them (See Rule 119.27(1) of the Rules of the Law Society of Alberta and section 117(1) of the Legal Profession Act).
Law firms operating trust accounts must either submit trust accounting and billing data to the Law Society electronically or file an annual Accountant’s Report. They also must file the annual Self-Report regardless of whether they file an Accountant’s Report or download data through an authorized software program.
Law firms operating only a general bank account are also required to complete sections A and B of the annual Self-Report. Please refer to Module 4 for details on report filing.
The Law Society performs audits and investigations. Audits can be risk-based, based on the exceptions identified in your annual filings (accounting upload, accountant’s reports or any other reporting submitted to the Law Society), or can be rotational.
See Detailed Accounting Questions.
<3.4 Basics for General and Trust Accounts
3.6 Types of Trust Accounts - Pooled Trust Accounts>