Ethics

A. Rule 26 of the Professional Conduct and Practice Rules 2005 (pdf) is based on the assumption that you will be liable, unless a different arrangement is agreed up front and in writing.

When instructing a third party, you must inform the third party either:-

• that you will accept personal liability; or
• the details of other arrangements for payment of their fees.

If a client later defaults payment, you may be able to pursue the client. However, the third party may recover their fees directly from you in the meantime, unless written information to the contrary was given.

Rule 26 is not unique. For example, it reflects the position in the Law Institute of Victoria/AMA Victoria Guidelines for Cooperation between Doctors and Lawyers (pdf). 

A. A firm can withdraw money from the trust account for payment to the person for whom the money was received, or in accordance with that person’s directions – Legal Profession Act 2004 (pdf), S 3.3.14.

If the money was received for the firm then trust money may be applied for the firm’s own use:

• by way of reimbursement of money paid on behalf of the client; or
• towards payment of the firm’s costs for work performed for the client (Legal Profession Rules 2005, S 3.3.34 (3) and (5)).

If a practitioner is personally liable for fees to be paid to a third party for services obtained on behalf of a client, those fees may be reimbursed from the funds held in trust.

If money is held in trust for a specific disbursement, that money can only be applied to that specific disbursement unless the client otherwise authorises.

Whenever money is placed in a trust account, it is wise to clarify for whom the money is being held.

For further information please contact:

Inspections Department
Dianne Murray
Ph: (03) 9607 9514

Costing Department
Ph: (03) 9607 9403