Trust Account Signing Authority

May I give a non-licensee signing authority over my trust account?
May I give a non-licensee signing authority over the trust account if I have formed a multi-discipline partnership (MDP) or an affiliation with that individual?
Is it permissible for me to sign blank trust cheques when I am going to be away?
I am the only one with signing authority on the firm trust account. What should I do if I am unavailable to sign trust cheques, due to a planned or emergency absence?

Q:  May I give a non-licensee signing authority over my trust account?

A: No. While it is acceptable, as an internal measure for the firm, to require the co-signature of a non-licensee employee (e.g. an office administrator or bookkeeper) on all trust cheques, that non-licensee must not have the ability to negotiate funds from the trust account unilaterally. Section 11(b) of By-law 9 requires that monies drawn on a trust account shall not be "signed by a person who is not a licensee except in exceptional circumstances, and except when the person is bonded in an amount at least equal to the maximum balance on deposit during the immediately preceding fiscal year of the licensee in all the trust accounts on which signing authority has been delegated to the person." The Law Society has only rarely found exceptional circumstances exist to allow a non-licensee to have signing authority over a lawyer's or a paralegal's trust account, such as the lawyer's or paralegal's death or where he or she practises law or provides legal services in an isolated location. Holidays and unavailability of a lawyer or paralegal due to court commitments or other temporary constraints will not be considered "exceptional circumstances."

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 Q: May I give a non-licensee signing authority over the trust account if I have formed a multi-discipline partnership (MDP) or an affiliation with that individual?

A: No. Section 11(b) of By-law 9 requires that monies drawn on a trust account shall not be "signed by a person who is not a licensee except in exceptional circumstances, and except when the person is bonded in an amount at least equal to the maximum balance on deposit during the immediately preceding fiscal year of the licensee in all the trust accounts on which signing authority has been delegated to the person." The By-law does not provide an exception for non-licensees with whom you have formed a MDP or an affiliation.

As an internal measure for the MDP, it may be acceptable to require the co-signature of a non-licensee partner or employee (e.g. an office administrator or bookkeeper) on all trust cheques, However, that non-licensee must not have the ability to unilaterally negotiate funds from the trust account for the MDP. Because a non-licensee who affiliates with you or your firm is not actually part of your firm, it would be inappropriate to require his or her co-signature on trust cheques being drawn from you or your firm's trust account.

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Q: Is it permissible for me to sign blank trust cheques when I am going to be away?

A: No. This is an inherently unsafe practice. By signing blank trust cheques you have effectively given control over the trust account to a non-licensee and breached your fiduciary obligation as a trustee to protect the trust.

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 Q: I am the only one with signing authority on the firm trust account. What should I do if I am unavailable to sign trust cheques, due to a planned or emergency absence?

A: If you are the only lawyer or paralegal with signing authority on your trust accounts, it would be prudent for you to make arrangements for another insured lawyer or paralegal who is licensed by the Law Society of Upper Canada, and is entitled to practise law or provide legal services, to have signing authority over your trust accounts in the event you are unavailable to do so. This should allow for both expected absences, such as vacation or parental leave, and unexpected emergencies, including illness or accident. You may arrange this through your financial institution by means of a power of attorney. To prepare for unexpected death, you may also wish to include in your will terms for the operation of your trust accounts and the closure or transfer of your practice.

In such instances it may also be advisable to arrange for co-signing by a person who is knowledgeable about your law or legal services practice (e.g. a law clerk, accountant or bookkeeper that you employ) to give better assurance and assistance to the other licensee who may be called upon to arrange for payment of funds from your trust account. For more information, see the Contingency Planning Guide for Lawyers or the Contingency Planning Guide for Paralegals, as well as LawPRO®'s Managing Practice Interruptions resources.

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