Trust fund rules amended

The Benchers have approved changes to several Law Society Rules on trust accounting.

Funds received by a lawyer as joint personal representative are trust funds

The definition of “trust funds” in Rule 1 has been changed to include funds that a lawyer receives in his or her capacity as a sole or joint personal representative of a person or as a trustee under a trust if the appointment derived from a solicitor-client relationship.

Prior to the amendment, “trust funds” included funds received by a lawyer as a sole personal representative, but arguably not funds received by a lawyer as a joint personal representative. This distinction did not appear sensible. It also was arguable that the rules did not apply when a lawyer was appointed a joint personal representative with a non-lawyer. The Trust Review Department recommended that all trust transactions by a lawyer as a personal representative be included in the definition of “trust funds” so that the Law Society will be in a position to carry out its responsibilities to the public.

Notification needed when lawyer withdraws from practice while a personal representative

A lawyer who withdraws from practice or becomes a non-practising or retired member must notify a client for whom the lawyer has been appointed the personal representative, executor or trustee. Rule 3-80 now requires that the lawyer confirm to the Law Society that he or she gave this notification. Lawyers should ensure that their office systems allow for ready identification of all files in which they are named as personal representatives.

Insurance-exempt, non-practising and retired lawyers need not file trust reports

Following changes to Rules 3-72 and 3-73, practising members who are exempt from the requirement to maintain professional liability insurance (under Rule 3-25), non-practising members and retired members are all excused from filing any portion of a trust report, provided they have not received any funds in trust or withdrawn any funds held in trust during the preceding 12-month reporting period.

Previously, practising lawyers who were exempt from insurance and had not handled trust funds over this period were required to complete section A of the trust report, or file a statutory declaration. These lawyers will now file only their annual practice declaration, which will include a confirmation that they have not handled trust funds. Non-practising and retired members need not complete an annual practice declaration unless required to do so by the Executive Director.

From this point forward, a practising lawyer who becomes exempt from insurance, or a lawyer who becomes a non-practising or retired member, must provide a declaration to the effect that the lawyer will advise the Law Society if he or she comes into possession of trust funds and that he or she will comply with reporting requirements.

Rules 2-52, 3-51, 3-58, 3-72, 3-73, 3-74, 3-74.1, 3-78 and 3-80 have been revised to bring these changes into effect and can be consulted on the Law Society website at