Practice Watch: Know the rules for handling cash
by Barbara Buchanan, Practice Advisor, Conduct & Ethics
No cash rule in retainer agreements
Lawyers may only accept or receive cash in the limited circumstances permitted by Law Society Rule 3-51.1. All lawyers and individuals authorized to handle money should be aware of this rule, which prohibits lawyers from accepting $7,500 or more in cash except in limited circumstances. You may wish to make it your policy not to accept cash in order to reduce your chances of offending the rule.
In an effort to discourage clients from proffering cash, consider adding a paragraph similar to the following in your standard retainer agreement:
Please note that we do not accept any funds in cash, including our retainer. As protecting your legal interest may require paying funds within certain time limits, we recommend that you discuss with us any necessary arrangements in advance to provide payment to us by way of certified cheque, money order, bank draft, electronic transfer or credit card.
If you educate your clients and those who work in your office about Rule 3-51.1, you are unlikely to find yourself in circumstances that offend the rule. For example, your legal assistant will know not to accept cash in relation to a purchase and sale transaction and your client will know not to offer cash in the first place.
You can find retainer agreement precedents in the Practice Support section of the Law Society’s website.
Cash receipt book requirement
Lawyers in private practice who accept cash in the limited circumstances permitted by Rule 3-51.1 must maintain a cash receipt book of duplicate receipts and make a receipt in the receipt book for any amount of cash received (Rule 3-61.1). All lawyers and individuals authorized by a lawyer to sign the receipt book on the lawyer’s behalf should be aware of the receipt book requirements in Rule 3-61.1.
Both the lawyer who receives cash and the person from whom the cash is received must sign the duplicate receipt book. In addition to the two signatures, each receipt must identify:
- the date on which the cash was received;
- the person from whom the cash was received;
- the amount of cash received;
- the client who provided the cash; and
- the number of the file in respect of which cash was received.
Withdrawing cash from trust
A lawyer who is required by Rule 3-51.1(3.1) to withdraw funds in cash from a pooled or separate trust account must make a record of the transaction and that record must be signed by the person to whom the cash is paid. The transaction record must also identify:
- the date on which the cash was withdrawn;
- the amount of cash withdrawn;
- the name of the client in respect of whom the cash was withdrawn;
- the number of the file in respect of which the cash was withdrawn; and
- the name of the person to whom the cash was paid.
For further information regarding Practice Watch, contact Barbara Buchanan, Practice Advisor, at 604-697-5816 or email@example.com.