5.01 In these Rules
“accountant” means a person within a class of persons designated by the Society from time to time that it considers qualified and is licenced by the Public Accountants Licensing Board of Newfoundland and Labrador, to carry out the functions of an accountant under these rules.
(Rule 5.01(a): Amended Fall Term Convocation, September 26, 2005)
“Act” means the Law Society Act, 1999;
“acting in a representative capacity” means acting as:
“client” means any person or body of persons, whether or not incorporated, from whom or on whose behalf a member, or professional law corporation, in connection with the member’s practice, receives money or other property;
(Rule 5.01(c): Amended Winter Term Convocation, February 6, 2012)
“credit union central” means a central cooperative credit society as defined in section 2 of the Cooperative Credit Associations Act, or a credit union central or a federation of credit unions or caisses populaires that is regulated by a provincial or territorial Act other than one enacted by the legislature of Quebec.
“disbursements” means amounts paid or required to be paid to a third party by the lawyer or the lawyer’s firm on a client’s behalf in connection with the provision of legal services to the client by the lawyer or the lawyer’s firm which will be reimbursed by the client.
“electronic funds transfer” means an electronic transmission of funds conducted by and received at a financial institution or a financial entity headquartered in and operating in a country that is a member of the Financial Action Task Force, where neither the sending nor the receiving account holders handle or transfer the funds, and where the transmission record contains a reference number, the date, transfer amount, currency and the names of the sending and receiving account holders and the conducting and receiving entities.
“expenses” means costs incurred by a member or law firm in connection with the provision of legal services to a client which will be reimbursed by the client including such items as photocopying, travel, courier/postage, and paralegal costs.
“financial institution” means
“financial services cooperative” means a financial services cooperative that is regulated by an Act respecting financial services cooperatives, CQLR, c. C-67.3, or an Act respecting the Mouvement Desjardins, S.Q. 2000, c. 77, other than a caisse populaire.
“firm” includes an individual member, a professional law corporation, a partnership of members or professional law corporations or any combination thereof, carrying on the practice of law where one set of books of account is maintained;
(Rule 5.01(e): Amended Summer Term Convocation, June 10, 2005)
“Foundation” includes one or other of the Law Foundations of New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island, as the context requires;
(Rule 5.01(f): Adopted Winter Term Convocation, February 6, 2012)
“general account” means a deposit account in a financial institution authorized by law to receive money on deposit, maintained by a member in connection with the practice of law, other than a trust account;
(Rule 5.01(g): Amended Winter Term Convocation, February 6, 2012)
“general trust account” means a regular interest-bearing deposit account in a financial institution authorized by law to receive money on deposit, maintained by a member and designated as a trust account into which the member deposits money received in trust from or on account of more than one client, at interest that is remitted to the Foundation by the financial institution on instructions filed by the member in accordance with the by-laws of the Foundation;
(Rule 5.01(h): Amended Winter Term Convocation, February 6, 2012)
“member” includes an individual member of the Society, a firm and an association of members who carry on the practice of law together other than as a firm, and in Nova Scotia member means a barrister;
(Rule 5.01(i): Amended Winter Term Convocation, February 6, 2012)
“legal services” means the practice of law as defined in s. 2(2) of the Law Society Act, 1999.
“money” includes cash, cheques, drafts, credit card transactions, post office orders, express and bank money orders, and electronic transfer of deposits at financial institutions.
(Rule 5.01(j): Amended Winter Term Convocation, February 6, 2012)
“specific trust account” means a separate deposit account or instrument in a financial institution authorized by law to receive money on deposit, maintained by a member on behalf of a specific client, and designated as a trust account on behalf of that client, into which the member deposits money received in trust, at interest that is, and is intended to remain, the property of the client;
(Rule 5.01(k): Amended Winter Term Convocation, February 6, 2012)
“Society” includes one or other of the Law Societies of New Brunswick, Newfoundland and Labrador and Prince Edward Island, and the Nova Scotia Barristers’ Society, as the context requires;
(Rule 5.01(l): Amended Winter Term Convocation, February 6, 2012)
“trust account” means a general trust account or a specific trust account;
(Rule 5.01(m): Amended Winter Term Convocation, February 6, 2012)
“trust money” includes
(Rule 5.01(n): Amended Winter Term Convocation, February 6, 2012)
“trust property” includes any property of value belonging to a client, other than trust money, received by a member in trust, or to be held on behalf of or at the direction or order of the client, and over which the member has sole signing authority or control in any capacity with respect to the administration of an estate or a trust, as a guardian or under a power of attorney.
(Rule 5.01(o): Amended Winter Term Convocation, February 6, 2012)
5.01.1 A member who maintains a trust account shall also maintain a general account.
(Adopted Rule 5.01.1, Summer Term Convocation, June 9, 2007)
5.02 (1) Every member shall maintain, so as to be clearly distinguishable from the record of money received and disbursed in the member’s general account, books, records and accounts to record all trust money and trust property received and disbursed in connection with the member’s practice, and as a minimum requirement every member shall maintain
(Rule 5.02(1):Amended Fall Term Convocation, October, 2004)
(Rule 5.02(1)(k): Adopted Winter Term Convocation, February 6, 2012)
(2) The entries in the books, records, data sources and accounts required to comply with subsection 5.02(1)
(3) This section applies, with necessary modifications, to members acting in a representative capacity in accordance with sections 5.01 and 5.14.
5.03 (1) A member must pay into and withdraw from, or permit the payment into or withdrawal from, a trust account, only money that is directly related to legal services that the lawyer or the lawyer’s law firm is providing.
(2) A member must pay out money held in a trust account as soon as practicable upon completion of the legal services to which the money relates.
5.04 (1) Subject to subsection 5.03(6), a member who receives trust money shall forthwith, but no later than the first banking day following receipt, pay it into an account which
(Rule 5.03(1)(d): Amended Winter Term Convocation, February 6, 2012)
(2) Notwithstanding subsection 5.03(1), trust money received by means of an electronic funds transfer is deemed to be deposited in a trust account when the member receives written confirmation from the financial institution providing details of the electronic funds transfer. On-line confirmation may be accepted by the member provided a copy of the confirmation with the amount highlighted is printed and place in the respective client file.
(Rule 5.03(2): Amended Summer Term Convocation, June, 2006)(Rule 5.04(2): Amended Winter Term Convocation, February 6, 2012)
(3) A member shall seek the written confirmation referred to in subsection 5.04(2) no later than the close of the banking day immediately following the day on which the member was notified of the electronic funds transfer into the member’s trust account.
(4) A member may keep more than one trust account.
(5) A member shall pay into a trust account only
(Rule 5.03(5): Amended Winter Term Convocation, February 6, 2012)
(6) A member need not pay trust money into a trust account if
(7) A member shall not pay into a trust account
(8) Money held in trust for or on account of a client with respect to the practice of law in a specific province shall be maintained in compliance with the National Mobility Agreement or such other mobility agreements as apply to the Society, unless instructed otherwise by the client in writing.
5.05 (1) Subject to subsection 5.05(2), a member who becomes entitled to money in a trust account shall withdraw it as soon as reasonably possible after becoming entitled.
(2) A member shall not withdraw or transfer money from a trust account except
but in no case shall withdrawals or transfers exceed the balance of the money held in trust for the client
(3) Other than allowed by subsection 5.04(2), money shall not be withdrawn or transferred from a trust account unless a person designated by the Society specifically authorizes its withdrawal or transfer in writing.
(4) A member shall only withdraw money from a trust account
(5) A cheque drawn on a trust account shall
(Rule 5.04(5)(d): Amended Summer Term Convocation, June 10, 2005)
(Rule 5.04(5)(e): Adopted Summer Term Convocation, June 9, 2006)
(Rule 5.04(5)(f): Amended Summer Term Convocation, June 9, 2006)
(5.1) Where a member practices alone and without any partners or associates, arrangements must be made for another member to sign the trust cheque during periods of absence from the firm.
(Rule 5.1: Adopted Summer Term Convocation, June 9, 2006)
(6) A member shall only withdraw money from a trust account by means of electronic funds transfer if the following conditions are met:
(Rule 5.04(6)(c): Amended Summer Term Convocation, June 10, 2005)
(7) No later than the close of the banking day immediately following the day on which the confirmation referred to in subsection 5.05(6)(c) is sent to a member, the member shall
(8) For greater certainty, a member shall not make cash withdrawals from a trust account by means of a debit card.
(9) At all times a member shall maintain sufficient balances on deposit in trust to meet the member’s obligations with respect to money held in trust for clients, and all shortages shall be restored immediately by the member.
5.06 (1) Subject to subsection 5.06(2), the member shall report immediately to the Executive Director any overdrafts in the member’s trust account, which report shall include a full explanation for how the overdraft occurred.
(2) A transaction which creates an overdraft in a trust account below an amount sufficient to meet all of the member’s obligations shall not be a violation of these Rules and does not have to be reported if the transaction which caused the overdraft resulted from:
(3) An accountant shall not be required to report an incident referred to in subsection 5.06(2) if the overdraft in the trust account was less than one hundred dollars.
5.07 (1) Upon the opening or closing of a general trust account every member shall forthwith give written notice to the Executive Director of the Society in which jurisdiction the member is engaged in practice.
(2) Where a member gives notice under subsection 5.07(1) of opening a trust account, the member shall also file with the executive director a letter and a Form 5.07C from an accountant as defined in Rule 5.01, certifying that the member has in place a trust accounting system that will enable the member to comply with the trust account Rules and that the member has been instructed in the procedures to be followed in order to operate the trust accounting system.
(Rule 5.06(2): Amended Fall Term Convocation, September 26, 2005)
(3) Every member shall complete and file with the executive director not later than a date fixed by the Society a member’s Annual Report in Form 5.07A or a declaration in Form 5.07B.
(Rule 5.06(3): Amended Fall Term Convocation, September 26, 2005)
(4) The Member’s Annual Report filed under subsection 5.07(3) shall be signed only by the member, or in the case of a firm, by the managing partner or other member in authority designated by the firm, and the bookkeeper of the firm.
(Rule 5.06(4): Amended Fall Term Convocation, September 26, 2005)
(5) If, in the opinion of the Executive Director, a member fails to provide sufficient information in the Member’s Annual Report to confirm that the member is complying with these Rules, the Executive Director may request the member in writing to provide additional information by such time and to such extent as the Executive Director considers necessary, including filing a further Report on a fixed or periodic basis.
(6) Every member who is subject to exemption under subsection 5.09(1), shall complete and file with the Executive Director not later than a date fixed by the Society a declaration in Form 5.06B confirming the exemption.
(Rule 5.06(6): Amended Special Term Convocation, December 5, 2005)
5.08 If a member fails to file a report in form 5.07A or 5.07B within the time required under section 5.07, or fails to provide additional information in compliance with a request under subsection 5.07(5), the Executive Director shall send a notice in writing to the member and/or firm informing the member and/or firm that if form 5.07A or 5.07B is not filed within fifteen (15) days from the date of delivery of the notice to the member and/or firm, the membership or enrollment in the society shall be suspended until such time as the member and/or firm is in compliance.
(Rule 5.07: Amended Special Term Convocation, December 5, 2005)
5.09 (1) These Rules do not apply to a member who,
(2) A member who is registered as a non-practising member is exempt from the filing of a declaration in form 5.07B.
(Rule 5.08: Amended Special Term Convocation, December 5, 2005)
5.10 (1) The Executive Director may initiate an investigation or audit of the books, records, accounts and transactions of a member or former member to determine compliance with these Rules.
(2) The Executive Director shall select the investigator or auditor to conduct an investigation or audit under subsection 5.10(1) from a list of auditors approved by the Society or designated for the particular investigation or audit.
(3) For the purpose of ensuring that all members comply with these Rules, the Executive Director may implement and direct a continuing program of unannounced investigations or audits of the books, records, accounts and transactions of members
(4) The Executive Director may conduct a program referred to in subsection 5.10(3) by randomly selecting members whose accounts are to be investigated or audited or by dividing the members into categories and, within each category, randomly selecting members for investigation or audit.
(5) Where an investigation or audit is to be conducted under this section, the member shall produce to the person conducting the investigation or audit all evidence, books, records, papers, accounts, vouchers, files, clients’ files and explanations which may be required for the investigation or audit, and failure of the member to co-operate constitutes professional misconduct.
(6) The Executive Director shall provide a copy of the report of an investigator or auditor to the member whose accounts have been investigated or audited.
(7) An accountant conducting an investigation or audit under this section shall, before doing so, complete and file with the Executive Director an undertaking to maintain strict confidentiality with respect to all matters connected with the investigation or audit.
(8) If the investigator or auditor reports that these Rules have not been complied with, the Executive Director
(9) Whenever an investigation is carried out under this rule the member whose books and records are being investigated shall pay the Society costs, or part of the costs, of the investigation and the member shall pay the amount in full within the terms and dates fixed or extended by the Executive Director.
(10) If a member fails to comply with an order under subsection 5.10(8)(1) or fails to pay the amount determined under subsection 5.10(9) within the terms and date fixed or extended, the Executive Director shall suspend the member until the member is in compliance.
(11) This section applies, with necessary modifications, to members acting in a representative capacity in accordance with sections 5.01 and 5.14.
5.11 Nothing in these Rules deprives a member of any recourse or right, whether by way of lien, set-off, counter-claim, charge or otherwise, against money standing to the credit of a client in the member’s trust account or with respect to trust property.
5.12 (1) A member shall not borrow money from a client during the existence of a solicitor and client relationship unless:
(2) Before lending money to a client during the existence of a solicitor and client relationship a member must, before agreeing to make the loan:
(3) When seeking the authorization of the Executive Director under rule 5.12(1)(c) or rule 5.12(2)(d), a member must comply with the following conditions:
(4) Prior to providing the financial assistance, the member must require that the client obtain independent legal representation from another member who is fully informed of the circumstances surrounding the proposed financial assistance including the terms of repayment.
(5) If the client waives independent legal representation, the client must obtain independent legal advice and the member providing same must provide to the client a certificate of independent legal advice in a form acceptable to the Society. If a client elects to waive independent legal representation and to rely on independent legal advice only, the retained member has a responsibility that should not be lightly assumed or perfunctorily discharged.
(6) The cost of the independent legal advice may be paid by the member providing the financial assistance, in which event the cost shall be included as a disbursement and the member must confirm that the client has been advised of the disbursement.
(7) Within ten (10) days of the provision of the financial assistance, the member must provide to the Executive Director evidence to demonstrate compliance with these guidelines, including
5.12.1 For the purposes of this rule,
(Amended Rule 5.11, Special Term Convocation, December 7, 2009; Amended, Benchers’ Convocation, 11 February 2013)
5.13 (1) Every member admitted as such by the Society shall immediately notify the Executive Director upon
(2) From the date of the event set out in rule 5.12(1), until the petition, assignment, proposal or receiving order has been satisfied, withdrawn, discharged or is otherwise of no further force or effect, the member and the trustee of the estate of the member in bankruptcy shall not, without written permission of the Executive Director, accept from or on behalf of clients any money or other property, except in payment of costs and fees of the member, and then only on such conditions imposed by the Executive Director.
(Amended Part V, Summer Term Convocation, June, 2004 to come into force October 1, 2004; Amended Rule 5.12, Winter Term Convocation, February 22, 2005)
5.14 (1) When a member receives money in a representative capacity, the money must not be paid into the member’s trust account but must be paid into a separate trustee account that has been established by the member for that purpose.
(2) Sections 5.02 and 5.05 of this rule apply to all trustee accounts operated by a member.
(3) Members are required to notify the auditor, selected by the Executive Director, of all trustee accounts over which the member has control and must submit, on demand, the books, records, accounts and documentation thereof in a form sufficient to accommodate an examination, review, audit or investigation ordered by the Executive Director and co-operate with the auditor selected in the conduct of any examination, review, audit or investigation that may be ordered.
5.15 Failure to comply with these Rules shall constitute an allegation of conduct deserving of sanction.
(Adopted Rule 5.13, Special Term Convocation, December 5, 2005)
(Amended – Part V – Uniform Trust Account Rules, 2 January