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Gandhi

operating as a SP w/o a trust account

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Has anyone done this? LSO says that if you do not receive trust funds in your practice you do not need to open a trust account. This would obviously limit one from practicing in certain areas (i.e. real estate conveyancing). 

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This cannot and should not be considered legal advice. Please consult your law society and more experienced professionals in your jurisdiction who are able to advise you properly and in person.

Despite not offering you advice, please consider the following. A trust account exists to hold money that isn't yours - but includes both money that ultimately belongs to other people, and also money you have received in retainer for your work but have not yet earned. Since you haven't earned it yet, it still isn't yours, in a similar sense. The way you handle those different situations may change a bit, but the broad principle is still the same. The money is in trust because it isn't yours - it's still someone else's.

So here's the problem. Unless you plan on never collecting funds for work you have not yet completed, I cannot imagine how you would function without a trust account. Granted, I  use mine far less than many people, because I do a lot of legal aid work and consequently, for Legal Aid at least, it's absolutely true they don't pay me until the work is done and so those funds don't move through trust. But anyone retaining me privately and handing me a retainer would be different. I don't know of anyone who avoids using a trust account entirely.

Hope that helps, for whatever it's worth.

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Why would someone not open a trust account? You're likely to need to use it at some point and the recordkeeping, though important and necessary to educate yourself about, is not onerous unless you are doing a high volume of trust transactions. I think most banks don't even charge a fee for opening and operating a mixed trust account if you also have a business account with them.

The LSO has a lot of good resources on trust account management and there are good practice management programs that can help you with trust accounting and LSO compliant trust account management.

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https://lso.ca/lawyers/practice-supports-and-resources/practice-management-guidelines/financial-management

b) Money Paid Into a Trust Account

A lawyer who receives money in trust for a client shall immediately pay the money into a bank or other institution.

Pursuant to Sections 7(2) and (3) of By-Law 9, a lawyer receives money in trust for a client if the lawyer receives the following from a person

  • money belonging in whole or in part to the client
  • money held on behalf of a client
  • money held on a client’s direction or order
  • money advanced as a retainer for fees for legal services not yet rendered
  • money advanced as a retainer for disbursements not yet made
  • money paid to a lawyer that belongs in part to a client, in part to the lawyer, where it is not practicable to split the payment of the money
  • money that, by inadvertence, has been inappropriately drawn from a trust account, not in accordance with Section 9 of By-Law 9 [see below].

c

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It wouldn’t merely prevent you from practicing in certain areas. As stated, IT WOULD PRECLUDE YOU FROM TAKING A RETAINER. 
 

With respect, the fact that you are considering operating as a sole practitioner without any understanding of what a trust account is, is absolutely shocking. I strongly urge you to practise within a law firm, until you have sufficient knowledge and experience to practise as a sole.*
 

*None of the above is legal advice. 

Edited by QuincyWagstaff
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2 minutes ago, lawstudent20202020 said:

I worked in a support role for a lawyer that did not take retainers. I would only recommend it if you are ok with not getting paid for a lot of work.

Were they under a law society-imposed practice restriction not to operate one?

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4 minutes ago, QuincyWagstaff said:

Were they under a law society-imposed practice restriction not to operate one?

Nope, just really terrible practice management skills.

Edit: I should add, they didn't take 0 retainers, but it was not a standard practice for them to take retainers on files that needed them.

Edited by lawstudent20202020

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You guys are forgetting that you can also take general retainers from clients. (money into general without being in trust first) Now the rules on those are crazy and I can't see many clients doing it, but it is possible to have a retainer without operating a trust account.

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I know of a very experience lawyer (QC) who does not have a trust account. He does mostly legal aid work but also has a credit card billing system he uses in place of private retainers. If someone wants to retain him for criminal defence work, he takes their credit card information and they get billed monthly until the bill is paid off.

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3 hours ago, celli660 said:

You guys are forgetting that you can also take general retainers from clients. (money into general without being in trust first) Now the rules on those are crazy and I can't see many clients doing it, but it is possible to have a retainer without operating a trust account.

That is the opposite of helpful. 

How are you even certain these don’t violate the law society rules in certain provinces? 
 

Mods need to close this thread. 

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10 minutes ago, uglydog said:

I know of a very experience lawyer (QC) who does not have a trust account. He does mostly legal aid work but also has a credit card billing system he uses in place of private retainers. If someone wants to retain him for criminal defence work, he takes their credit card information and they get billed monthly until the bill is paid off.

QCs get in trouble with the law society too, you know. 
 

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1 hour ago, QuincyWagstaff said:

QCs get in trouble with the law society too, you know. 
 

How is there anything wrong with what I just described? OP asked about running a practice with no trust account and I gave him an example of one. Take a chill pill quincywaggstaff. Maybe you need to leave this thread if you can't handle the idea of running a practice without a trust account. 

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I know a lawyer in BC who has a sole practice without a trust account. He practices mostly wills & estates, and I understand he generally bills a flat fee after the work is completed.

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19 minutes ago, NucksFTW said:

I know a lawyer in BC who has a sole practice without a trust account. He practices mostly wills & estates, and I understand he generally bills a flat fee after the work is completed.

That is insane and nonsensical. Even leaving aside the retainer issues being discussed here, wills and estates is the very definition of a practice area where funds that are not your own are virtually guaranteed to flow through your hands. How anyone would deal with that without a trust account is unimaginable.

I agree now that the mods should close this. Because either information is flowing here from people who just happen to know lawyers who are one audit away from serious professional difficulties, or else this has become a dangerous example of people who don't know their ass from their elbow presuming to advise where they really shouldn't. Either way, it's exactly why we aren't supposed to go down this rabbit hole. And I fault myself for contributing to addressing this in any substantive way, even though quite frankly I'm right, and several of you just aren't.

I won't add to this further, going forward. It's just asking for trouble.

Edited by Diplock
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