3.11 I Have a Trust Shortage - Now What?
If you discover a trust shortage see the Rules of the Law Society of Alberta (Rule 119.24(3)). In many cases there is a solution.
First, if you can't do anything to resolve the problem, you must immediately deposit enough money into the trust account to eliminate the shortage but think logically about it. For example, if at the last minute the bank pulled its mortgage advance, seek an extension of the closing date for your transaction and call back the trust cheque.
Second, whether you have corrected the problem or not, you must immediately make a written report to the Executive Director, including all relevant facts and circumstances, if
- the trust shortage is greater than $2,500, or
- the deficiency is not corrected within seven days of the date of the shortage.
Service charges, credit card discounts and bank errors are considered to be "trust shortages". Service charges should not be withdrawn from your trust account but from the general account.
If you think that circumstances of the shortage could form the basis of a claim or suit against you (whether or not you believe your client will ultimately suffer damages), you should report the matter to the Alberta Lawyers Insurance Association (ALIA) as soon as practicable. Depending on the nature of the shortage, ALIA may be able to advise you about how to fulfill your requirements under Rule 152(1) and inform the client.
Please refer to the Law Society of Alberta website for reporting a claim or a potential claim.
You are also obligated to report any theft of money by any person from your trust or general accounts (Rule 119.24(7)).