Withdrawing Trust Money

Section 3.1 of the Uniform Trust Account Rules explicitly provides that funds paid into or out of a trust account must be directly related to legal services provided by the lawyer or law firm (definition of “trust money”; paragraph 3(5)(a), s. 3.1). In addition, on completion of the legal services to which the funds relate, a lawyer or law firm must take reasonable steps to obtain appropriate instructions to pay out the funds as soon as practicable (s. 3.1).

You must withdraw from or permit withdrawal from your trust account only money that is directly related to legal services that you or your firm is providing;
You must pay out money held in your trust account as soon as practicable upon completion of the legal services to which the money relates.

Section 4 of the Uniform Trust Account Rules provides that you may only withdraw from a trust account funds that are:

properly required for payment on behalf of a client;
properly required to reimburse the lawyer for money properly expended or for expenses properly incurred on behalf of a client;
properly required for or towards the lawyer’s fees for which a billing or notification has been delivered to the client;
directly transferred into another trust account and held on behalf of a client; or
deposited inadvertently into a trust account in contravention of the Uniform Trust Account Rules.

You may only withdraw funds from your trust account by cheque or by means of an electronic funds transfer that complies with subsection 4(8) of the Rules. Lawyers may NOT withdraw money from a trust account with a debit card.

Any cheque that is drawn on your trust account must be:

marked as a ‘trust ‘cheque;
made out to a named payee. It cannot be made out to ‘cash’ or to ‘bearer’ in other words;
signed by the lawyer. You may not use an electronic signature or a stamp of your signature on a trust cheque; and
signed by at least two people, one of whom is a member of the Law Society, if you practice with any partners or associates.

You must not withdraw trust funds unless your records are up to date and you hold sufficient funds to the credit of the client on whose behalf you are withdrawing money. This means that you have to look at the particular client’s trust ledger to ensure there are sufficient funds held for the client.

Other Considerations

Lawyers must ensure that bank fees and service charges are not taken from their trust account. Some examples of possible bank fees are:

a client’s cheque returned as ‘non-sufficient funds (NSF);
charges for your own cheque order; or
credit card company fees.

These, and any other fees, must not be charged to your trust account. You will need to speak with your bank and with any other service provider with access to your account to ensure that they understand this. Bank and other such fees will be paid from your general account. If an error is made, you will have to immediately take steps to have it corrected.

Paying Your Fees from a Trust Account

You may only pay your fees from a trust account after you have done the legal work, and have either prepared and delivered your bill to your client, or have notified your client in writing in some other manner (subsection 4(2) of the Rules). It is important for you to remember that the only way to move your fees from the trust account to your general account is by trust cheque made payable to your general account or by transfer that satisfies the requirements of subsection 4(8) of the Rules. Remember also that you may not make out a cheque to ‘cash’ or ‘bearer’.