News — Withdrawal of funds from trust

Strict rules govern the withdrawal of money from a trust account for the payment of legal costs.

 

Part 9 of the Legal Profession Act 2008 (WA) (“the Act”) and Part 7 of the Legal Profession Regulations 2009 (WA) (“the Regulations”) apply to the operation of trust accounts. Trust money can only be dispersed in accordance with a direction given by the person on whose behalf the money is been held. Further, trust money can only be withdrawn by cheque or electronic funds transfer. Regulation 65 of the Regulations governs the withdrawal of trust money for the payment of legal costs. There are two ways in which trust money can be withdrawn in payment of legal costs, as follows.

  1. Firstly, if one of the following situations exist, the law practice may withdraw money from the trust account in circumstances where a request for payment has been made, or a written notice of withdrawal given before the withdrawal is made:
    1. A valid and enforceable costs agreement, which authorises the withdrawal, exists;
    2. If instructions are given (in writing or confirmed in writing not later than 5 working days later) authorising the withdrawal; or
    3. If money is owed to the law practice by way of reimbursement.
  2. Secondly, if the law practice has given the client a bill and the client has not objected to the bill within 7 days, the law practice may make a withdrawal from the trust account in payment of the bill. If the client objects to the bill, the law practice may still withdraw money from the trust account if the client has not applied for a review of the legal costs contained in that bill within 60 days of being given the bill. Further, if the money otherwise becomes legally payable, the law practice may withdraw money from the trust account.

Accordingly, it is essential to remember that, prior to making a withdrawal from a trust account, either written notice of the withdrawal must have been given, or a bill must have been given, to which the client has not objected.