4.  Confirming Funds are Available – “Hold Periods”

Prior to disbursing any trust money on any matter, you must ensure sufficient money is held in trust for the matter. While this starts by checking the balance in the client trust ledger, it doesn’t end there.

The Law Society requires that the availability of funds be confirmed by:

  • checking the client trust ledger;
  • where electronic funds are being received, checking the pooled trust account to ensure the funds have been deposited;
  • establishing and adhering to law firm policy for appropriate methods of payments from clients and any related hold periods. Hold periods should be determined by firms through consultation with their savings institutions; and
  • investigating any ‘red flags’ that may occur at any point in the confirmation process

You will want to confirm that funds are available any time money is being paid from a client trust ledger, whether it is by issuing a trust cheque (or in those rarer cases, sending a wire transfer, or purchasing a bank draft), or even a transfer of funds between client ledgers (transfers are discussed in the next section).

PRACTICE TIP:

Personal cheques always have a recommended hold period, often four or more days.