The New Zealand Law Society
has made recommendations over how law firms and lawyers should handle controlled bank accounts.
In “Looking after a client's bank account
,” the Law Society defines nine “good practice” recommendations the profession should follow, including appointing a responsible person to determine whether a law firm has controlled bank accounts, developing a protocol for central recording of these accounts, and properly accounting administration of these controlled accounts.
Controlled bank accounts include accounts where a lawyer holds a power of attorney for an impaired client, and makes payment on behalf of the client from the client’s bank account. “Controlled accounts,” the Law Society said, are similar to trust accounts in the sense that a lawyer has control of money for, or on behalf of, a client.
In driving home the gravity of being responsible for client monies, the Law Society quoted the Canadian Bar Association, which said on its website that the right and privilege to take and hold money in trust is next to the right and obligation to keep clients’ secrets.
Federal law in Australia requires law firms to maintain records of all dealings with money held for, or on behalf of, any person in controlled bank accounts, which are known as “power accounts.”
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