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A number of law firms in New Zealand may be at high risk of potential fraud being committed from within the organisation. Why?

I cannot count the number of firms I have walked into, where the Trust Account Supervisor has made a similar statement; “I trust my administrator / trust accountant implicitly, s/he has been working for my firm for the last 20 years”. These words alone, add yet another bunch of grey hair to those I continue to desperately cover to deny the ravages of my role.

To run a lawyer’s trust account, you must be in practice on your own account as a barrister and solicitor, and meet the criteria around the training requirements.

The New Zealand Law Society (‘NZLS’) has issued these guidelines to assist lawyers with providing a system for handling client money and valuable property, and for administering trust accounts in law practices. Although these guidelines are not mandatory, compliance with them will generally ensure compliance with the trust account provisions of the Lawyers and Conveyancers Act 2006 and the Lawyers and Conveyancers Act (Trust Account) Regulations 2008.

It is recommended that you read the relevant legislation carefully and in particular, keep on hand a copy of the Regulations for ready reference in addition to these Guidelines. You are welcome to contact the NZLS with suggestions for improving these guidelines.

Frequently asked questions regarding the monthly trust account certificate for lawyers trust accounts.

Is it permissible for a firm to invoice and | or take payment of fees from funds held in trust, prior to the provision of services to the client?

Most of the time, the inspectors find that lawyers and law firms are generally complying with the relevant legislation and regulations. However, the Inspectorate has indentified some common areas that lawyers can address to improve their trust accounting practices.

This article covers several issues that have been the source of recent inquiries.