Withdrawals and transfers of trust money must comply with the Rules of the Law Society, Rule 119.27.
All withdrawals and transfers of trust money must be approved by a lawyer of the law firm. The approval must be recorded in paper or digital form.
A lawyer’s approval of a withdrawal or transfer of trust money is deemed to certify that:
- the trust accounting records are current to the date of the signature;
- the withdrawal of trust money is properly required for payment for the legal matter;
- the trust money is not subject to trust conditions or restricted for another purpose;
- the lawyer has the client’s explicit authority to make the withdrawal in the event a third party provided the trust money for the benefit of the client;
- the client has sufficient trust money to cover the withdrawal or transfer; and
- the trust bank account has sufficient funds to fund the withdrawal.
This means that you must review the particular client's trust ledger and the trust bank account to ensure there are sufficient funds held for the client.
Trust money must not be withdrawn or transferred (Rule 119.28(2)) unless it is:
- required for payment to the client for whom the trust money is held or for payment to any other authorized person;
- required for payment of a billing for fees, disbursements or expenses;
- being transferred directly into another trust account of the firm;
- paid into a trust account by mistake and is transferred or withdrawn to correct the error;
- deposited into the law firm trust account because the payment belonged in part to one law firm and in part to another; or
- required for a payment pursuant to a court order.
Note that bank fees are not within this list. You must ensure that your approved depository debits your general account, and not the trust account, for all fees.
If you anticipate an absence from the office, Rule 119.27(3) allows for a Responsible Lawyer to apply for approval to provide temporary authority to a lawyer of another law firm to approve withdrawals and transfers from the law firm’s trust account. You can apply for approval by emailing Trust Safety, ideally at least two weeks in advance, and stating:
- the time period needed;
- the full name of the proposed lawyer; and
- the reason for the request.
Since circumstances can change both for you and the proposed lawyer, approvals will only be granted for a maximum of six months. You can request a renewal if necessary.
Remember that you are responsible for your law practice even if something occurs during your absence. If the Law Society becomes aware that the proposed lawyer is no longer suitable, approval can be revoked.
The proposed lawyer will see information about your clients in your absence. Consequently, you must seek consent from those clients who may be affected by the use of the proposed lawyer.
Withdrawals by Cheque, Bank Draft/Money Order and Electronic Banking
Withdrawals by Cheque
Trust withdrawals may be made by cheque pursuant to Rules of the Law Society, Rule 119.30. Funds must be withdrawn by a cheque marked "trust," and signed by a lawyer authorized to sign the cheque (119.30(1)(b)).
You can withdraw trust money from your trust account by using a consecutively numbered trust account cheque which:
- must be signed by a lawyer authorized to sign the cheque;
- is marked “trust”;
- is payable to a person — and not to cash or bearer — except where required in order to refund cash;
- is payable to the ultimate recipient of the funds;
- bears the current date and is not post-dated; and
- is fully completed as to the correct payee and amount.
If the cheque is payable to an approved depository, you must note the reason for the payment in the memo field of the cheque (Rule 119.30(2)(d)).
The cheque may be co-signed by a non-lawyer if you decide you want a second signature (Rule 119.30(1)(c)).
Withdrawals by Bank Draft/Money Order
Trust withdrawals may be made by bank draft or money order pursuant to Rule 119.32. To withdraw funds by bank draft or money order, the approving lawyer must:
- obtain the recipient’s written authorization to receive the trust money in the form of a bank draft or money order;
- document the transaction using the designated form;
- purchase the money order only at an approved depository where the law firm has a pooled trust account;
- maintain a copy of the bank draft or money order on the client’s file; and
- obtain the recipient’s written acknowledgment of receipt of the trust money.
Electronic Banking Withdrawal
Electronic banking withdrawals must comply with Rule 119.31. Please see Electronic Banking Best Practice resource for additional guidance (resource not yet available).
If trust money is withdrawn electronically, the law firm must ensure each law firm user, who has access to the electronic banking platform, has a unique user log-in and password or access code.
The law firm must use a dual authentication process within the electronic banking platform.
The approving lawyer must complete an electronic banking withdrawal form or retain the following information, for each withdrawal, with the client file:
- reason for the withdrawal;
- method of withdrawal;
- client name and matter number;
- recipient name;
- the recipient’s written instructions (including the destination account name, account number and name of approved depository); and
- confirmation from the approved depository, produced within two banking days of a withdrawal, showing the details of the withdrawal (including the date and amount of the withdrawal, source account number and destination account name and number, if available).