2.5 – Withdrawing Trust Funds

Rule 1512 provides that you may withdraw from a trust account only those funds that:

• are properly required for payment to or on behalf of a client, or to satisfy a court order;
• are properly payable to you for fees, disbursements or other expenses relating to the practice of law;
• were deposited by mistake;
• are being transferred between trust accounts, whether pooled trust accounts or SIBAs;
• are due to the Law Foundation;
• are remitted to the Law Society as unclaimed trust funds pursuant to Part 17 of the Rules; or
• are authorized by the Executive Director for a purpose not otherwise specified.

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 (Rule 1512(1)). This means that you must look at the particular client’s trust ledger to ensure there are sufficient funds held for the client.

Funds must be withdrawn by a cheque marked “trust,” and signed by at least one member of the Law Society, whether that be you or another lawyer at your firm (Rule 1514(1)(f)). The cheque may be co-signed by a non-lawyer if you decide you want a second signature.

If you are practising alone, you can arrange with your bank for another member of the Law Society to have temporary signing authority during your absence. However, you must ensure client confidentiality is maintained (which in turn may require your client’s consent to the new signing authority depending on the nature of the cheques to be signed in your absence).

If you don’t already have a trusted co-signor for your trust cheques, this may be a good thing to put in place prior to your absence. Remember that your Annual Report requires you to list all the persons who have had signing authority on your trust accounts.

The only exceptions to withdrawal from trust by cheque are:

• by bank draft, only in exceptional circumstances approved in writing by the Executive Director of the Law Society, subject to the requirements of Rule 1514(2) and (3);
• by wire transfer pursuant to the requirements of Rule 1514(5);
• financial institutions paying interest earned on pooled trust accounts to the Law Foundation (Rule 1505(2)); and
• the client authorizing a transfer from a pooled trust account to a separate trust account (Rule 1515).

You cannot withdraw directly from a SIBA. Rather, to ensure a proper paper trail, you must first provide written instructions to the bank to transfer the funds back to your pooled trust account (Rule 1516).