Trust Accounting

Wise Owl Legal has been created in compliance with trust accounting regulations. In Australia trust accounting is governed by the Legal Profession Act 2007, a National Act, however the administration of this Act varies from state to state. Wise Owl Legal accommodates these local rules.

Trust Accounts are the most highly regulated and scrutinised aspect of a law firm’s operation. Non-compliant trust account activities are the highest cause of lawyers being penalised or losing their practicing certificates. Consequently, there are numerous strict rules and regulations that must be followed by the legal profession and incorporated into the law firm. The three golden rules for law firms in regards to their trust accounts is to one, be paranoid; two, be paranoid; and three BE PARANOID!

The trust accounting rules and regulations include:

Each trust ledger cannot be overdrawn in its own right
Trust bank accounts cannot be overdrawn
The date of a receipt AND the date of the entry of the receipt must both be recorded
1. in QLD you must not back date a trust receipt
2. in other Australian states you may record the date of a trust receipt as the date the funds were deposited into the bank
3. For example, in Victoria if you receive money by EFT on the 28^th October and see it on your bank statement on the 2^nd November the receipt is dated 28^th October; in Queensland it is dated 2^nd November.
Funds must be related to legal matters or files
Each file where funds are required to be held in trust need to have their individual file details set up
Trust receipts cannot be altered after they are entered
Trust funds must be banked as soon as is practicable. This is generally understood to be today or the next business day.
Section 18 of the Legal Professions Act defines Timing for doing things:
"If no time is provided or allowed for doing something under this Act, the thing is to be done as soon as practicable, and as often as required."
Trust accounts must be reconciled to the last day of the calendar month, every month, within 14 days of the last day of the month. Click here for help on reconciling your trust account.
Persons authorised to sign trust account cheques must be:
Associates of the law practice:
Section 7(1) Legal Professions Act An associate, of a law practice, is –
(a)   An Australia legal practitioner who is –
(i) A sole practitioner if the law practice is constituted by the practitioner; or
(ii)   A partner in the law practice if the law practice is a law firm; or
(iii)  A legal practitioner director in the law practice if the law practice is an incorporated legal practice; or
(iv) A legal practitioner partner in the law practice if the law practice is a multi-disciplinary partnership; or
(v) An employee of, or consultant to, the law practice or
(b)  An agent of the law practice who is not an Australian legal practitioner; or
(c)   An employee of the law practice who is not an Australian legal practitioner; or
(d)   An Australia-registered foreign lawyer who is a partner in the law practice; or
(e)   A person who is a partner in the multi-disciplinary partnership but who is not an Australian legal practitioner; or
(f)     An Australian-registered foreign lawyer who has a relationship with the law practice, that is a class of relationship prescribed under a regulation.
1. Law practices need to notify QLS within 14 days that they have authorised another legal practitioner or employee as signatories to their general trust account/controlled money accounts.
2. Note Employees who are non-legal practitioners must sign jointly with another employee

The trust accounting module of Wise Owl Legal is a standalone module. This is because funds in a solicitor's trust account does not belong to the law firm - they are simply held in trust for the Law Firm. As such trust accounts are heavily regulated. There is specific legislation affecting them and rigorous auditing of the records is undertaken by both external auditors to the firm and the relevant Law Society.