PEI lawyers hold money in their trust accounts on behalf of clients every day. This is an important privilege, responsibility and essential to the conduct of all types of business, including the sale of property, the handling of estates, and the settlement of court cases.
The Law Society has an extensive regulatory program for lawyers who handle trust money belonging to clients. It has established strict requirements for lawyers to follow in keeping books and records for their trust accounts. A new firm must file an accountant’s report with the Law Society indicating that the new firm has established a proper trust account and record-keeping system. Each year lawyers must file a detailed report (Form 17) with the Law Society to confirm that they are following the Society’s requirements for trust accounts.
Trust Account Reviews and Audits
The Law Society engages a firm of Chartered Accountants every year to review the trust accounting records and procedures followed by each law firm. The Law Society of PEI was the first Canadian Society to require this to be done on an annual basis and was viewed as a leader in this regard.
The accountants are sent to the firms by the Law Society and report to the Law Society. Following the review, a follow-up letter is sent to each firm from the Society with any questions and/or recommendations. Failure to follow the processes for trust accounting may result in disciplinary or remedial steps being taken. Council and Discipline Committees can order a more comprehensive forensic audit during an investigation or formal hearing into a complaint against a lawyer’s conduct, where warranted.