New rules have been created that will enable lawyers to electronically transfer trust funds using an online banking platform from the lawyer’s trust account to third parties, from the lawyer’s trust account to general account and between the lawyer’s trust accounts. These rules are effective July 1, 2018.
Rule 3-64.1 will replace Rule 3-64(7), which currently permits lawyers to transfer trust funds by wire transfer that is manually processed by the bank but prohibits lawyers from performing trust withdrawals themselves using online banking. Rule 3-64(6), which stipulates that lawyers may only transfer trust funds to their general account using a cheque, has been amended to also permit lawyers to withdraw trust funds for the payment of the lawyer’s fees by electronic transfer to their general account. Rule 3-64.2 is a new rule that will govern electronic deposits into trust.
Rule 3-64.1(2) requires two people to complete an electronic (online) transfer of funds from trust, one of whom must be the lawyer. Both people involved in the transfer must have an individual password to gain access to the electronic funds transfer system. The rule requires that a person other than the lawyer must enter data into the electronic funds transfer system describing the details of the transfer. However, the final step of authorizing the bank to complete the transfer must be done by the lawyer.
An exception has been created for sole practitioners with no non-lawyer staff. Under Rule 3-64.1(3), these lawyers are permitted to execute both the data entry step and the authorization step of the transfer under the condition that they use different passwords for each stage of the transaction.
At all times passwords and access codes must not be shared.
Lawyers will be required to complete a Law Society requisition form before performing an online transfer from trust. Lawyers must also ensure that the electronic funds transfer system produces a confirmation that meets the requirements of the new rule. The requisition form and confirmation must be retained with the lawyer’s accounting records.
More detailed guidance on the operation of the new rules will be provided to the profession in early 2018.