There are restrictions on lawyers as to when they are permitted to withdraw or transfer funds from trust accounts – see rule 5.05(2) for a full list. When it comes to getting paid for disbursements and expenses, rules 5.05(2)(a) and (b) are most relevant. They allow a lawyer to withdraw money in trust for a client that is properly required for a payment on behalf of a client or where the money is required to reimburse the member for money properly expended or expenses properly incurred on behalf of a client.
This means, for example, that a lawyer is not permitted to transfer release of mortgage registration fees from the trust account to the general account before the release is available. In order to be considered an expense incurred on the client’s behalf, it must be immediately necessary and therefore the release must be available before the funds can be transferred or withdrawn from the trust account.
A lawyer is never permitted to withdraw or transfer funds from a trust account if that account does not have sufficient funds being held in trust for the client, i.e. it is forbidden to withdraw or transfer funds if there are enough funds in the account as a whole but not enough funds being held on behalf of the client (rule 5.05(2)).
Withdrawals and Transfers from Trust Accounts: rule 5.05 (Law Society Rules)
Maintenance of Records: rule 5.02 (Law Society Rules)
Payment and Appropriate of Funds: section 3.6-10 (Code of Professional Conduct)
Duty to Report: section 7.1-3 (Code of Professional Conduct)
Statement of Account: section 3.6-3 (Code of Professional Conduct)
(Posted: June 12, 2020)