The Zen of Work: Unallocated Trust Deposits

With “Holly” on a mission to take control of her work situation – aiming to instil a feeling of Zen in her workspace – she has come to us seeking answers.

And we are happy to oblige Holly. As always.

After getting her law firm up and running – taking time to learn all about the “buzz words” out there, Holly has started to focus her attention inward. Looking more closely at how her law firm is actually operating. Or at least, how it should be operating.

And there is a lot to take in where the optimal operating of a law firm is concerned.

Take unallocated trust deposits as an example.

What must Holly do with an unallocated trust deposit?

So, let’s chat a bit about unallocated trust deposits and put Holly’s mind at ease.

Unallocated trust deposits

A legal practitioner is required in terms of Section 86 & 87 of Legal Practice Act 28 of 2014 (LPA) as well as the Legal Practice Rules and Regulations (LPR) to properly account for money received and paid on its own account, money received, held, or paid on account of a client, money invested in a trust account or other interest-bearing account. As such, a legal practitioner must be able to effectively manage their trust account, tracking all transactions made from a client.

There are however some instances where a legal practitioner may find themselves in the situation of unidentified or unallocated trust money showing up in their trust account.

Section 87(4)(a) of the LPA sets out that where the identity of the owner of the unallocated trust money is unknown to the firm or when the trust money has remained unclaimed after a year, he/she/they must, after the second annual closing of the accounting records (following the date of the deposit), pay that unallocated deposit over to the LPFF.

If it later turns out that the person or entity that deposited the money comes forward and identifies himself/herself/themselves, they can claim the money paid over to the LPFF once they have proven their entitlement to make such a claim.

In short – if Holly has obtained a fidelity Find certificate, has opened a trust account, and has thereafter found herself in the position of having a trust account deposit from a person or entity she cannot identify, she must pay that money over to the LPFF.

Simple as that.

Proper management of a trust account and compliance with the obligations imposed on trust account legal practitioners under the LPA and LPR enforces the professional and ethical conduct expected of legal practitioners and achieves proper management of trust accounts, including the risk of theft or misappropriation of funds by trust account legal practitioners.  These are things firms – like Holly’s – must take seriously and ensure strict compliance with.

There are a lot of attorneys who have the software packages in place but are just not sure how to fully use them, what everything does and how they can optimise their practice to ensure that it is performing with accuracy and reliability.

But, with the help of AJS, your practice (regardless of its size) can (and will) succeed.

We will continue going through tips, answering your FAQ’s, and providing you with information that will better equip the everyday user of legal tech, like you and like Holly, to achieve a state of Work Zen.

It’s all easy. If you know how… Just ask us.