Trust Accounting Key Definitions

 The following words have the specified meanings below:

• ADI – Approved Deposit-Taking Institution – i.e. A Bank

• Matters or File: Legal Profession (Solicitors) Rules 2007: any legal service the subject of a retainer or required to be provided by the solicitor or law practice to fulfil a retainer and includes services provided for:

• Trust bank account: S237 Legal Profession Act – an account kept by a law practice with an approved ADI for the holding of trust money received by the practice, other than controlled money or transit money
  
  
  

• Investment Money – s238 Legal Profession Act – investment moneys have the following characteristics:

• Money entrusted to or held by the law practice

  • In the ordinary course of legal practice; and

  • Primarily in connection with the provision of legal services to or at the direction of the client; and

  • The investment is or is to be made –

    • In the ordinary course of the legal practice; and

    • For the ancillary purpose of keeping or enhancing the value of the money or property pending completion of the matter or further stages for the matter or pending payment or delivery of the money or property to or at the direction of the client
      
      
      

• Controlled Money Account: s237 Legal Profession Act – an account kept by a law practice with an ADI for the holding of controlled money received by the practice.

Controlled money – money received or held by a law practice for which the practice has a written direction to deposit the money in an account, other than a general trust account, over which the practice has or will have exclusive control. Section 251(6) prevents pooling of controlled money

• Disbursement: s300 Legal Profession Act – include outlays.

The words ‘outlay’ and ‘disbursement’ in ordinary speech refer to amounts that have actually been paid out on a client’s behalf to some other person or entity. – Guidelines for Charging outlays and disbursements

• Trust receipt: When trust money is received into a general trust account, a trust account receipt must be issued or made out as soon as practicable after the trust money is received (Legal Profession Regulation 2007 s.34(2) & (3)). This is a trust record which a law practice is bound to keep. This will be a receipt of monies received into the law practice’s trust account.

Section 242 Legal Profession Act 2007 (Qld):

When money is received

(1)    For this Act, a law practice receives money when—

       (a)   the practice obtains possession or control of it directly; or

       (b)   the practice obtains possession or control of it indirectly as a result of its delivery to an associate of the practice; or

       (c)   the practice, or an associate of the practice (otherwise than in a private and personal capacity) is given a power to deal with the money on behalf of another person.

 (2)    For this Act, a law practice or associate is taken to have received money if the money is available to the practice or associate by means of an instrument or other way of authorising an ADI to credit or debit an amount to an account with the ADI, including, for example, an electronic funds transfer, credit card transaction or telegraphic transfer.