Legal Profession Regulation 2017

The regulation defines concepts by reference to the Act and its own dictionary in schedule 2. The most important operational concept is trust money, which the regulation sub-divides into several categories for accounting purposes. Section 27 defines trust money for division 1 of part 3.3 as trust money to which the division applies under s 28. The categories include general trust account money, controlled money, transit money, investment money, and money subject to a specific power. Each category carries distinct record-keeping obligations.

Controlled money is money received or held by a law practice subject to a written direction from a client that it be deposited in an account over which the practice has control. Section 47 requires such accounts to be named with the practice name, the expression ‘controlled money account’ or ‘CMA’ or ‘CMA/c’, and other identifying particulars. Transit money is money received by a law practice that is not required to be held in a general trust account or controlled money account because it is to be paid to a third party or forwarded to another entity. Section 52 requires only brief particulars to be recorded for transit money. Investment money is trust money that is invested under s 238(3) of the Act. Section 55 requires a register of investments recording the name in which the investment is held, the client’s details, amount invested, source, and interest details.

The concept of associate of a law practice is critical. Section 27 defines associate in relation to a law practice as an associate of the law practice. Sections 4 and 5 prescribe criteria for determining an associate’s home jurisdiction and prescribe agencies for the purposes of s 12 of the Act. Home jurisdiction for an associate defaults to the jurisdiction of the associate’s place of residence in Australia; if none, the last place of residence in Australia (s 4). Prescribed agencies under s 5 include the Australian Government Solicitor, the Crime and Corruption Commission, each Hospital and Health Service, the Office of the Ombudsman, the Queensland Building and Construction Commission, and the Residential Tenancies Authority.

Community legal service is defined in schedule 2 of the Act, and s 6 prescribes Legal Aid Queensland as a community legal service for the purposes of that definition. Section 7 prescribes kinds of legal practice that are not prohibited as reserved legal work, including provision of legal services by community legal services and by publicly funded non-profit corporations whose primary purpose is to provide legal services to Aboriginal or Torres Strait Islander people. Section 11 similarly prescribes corporations that are not incorporated legal practices.

Sophisticated client is used in s 54 in relation to trust account statements: a sophisticated client may direct a law practice not to give trust account statements under s 53. The definition is imported from s 300 of the Act. Government legal officer is another key concept: s 24 provides that provisions of the solicitors rules or barristers rules do not apply to a government legal officer if the officer does not hold a local practising certificate granted by the rule-making body, or compliance would involve contravention of another Act.

External examiner qualifications are prescribed in s 65: an individual must be registered as an auditor under the Corporations Act, or be a member of CPA Australia, Chartered Accountants Australia and New Zealand, or the Institute of Public Accountants with specified entitlements and experience, or be an employee or agent of the law society recognised as having appropriate qualifications.

The regulation directly binds all law practices engaged in legal practice in Queensland, including sole practitioners, partnerships, incorporated legal practices, and multidisciplinary partnerships. It also affects Australian legal practitioners (both solicitors and barristers) who hold or seek local practising certificates, as well as foreign lawyers registered in Queensland. Specific provisions apply to interstate legal practitioners who become authorised to withdraw money from a local trust account (s 78). Community legal services are treated as law practices for the purposes of part 3.6 (fidelity cover) by s 74, and their employees and volunteers are taken to be associates of a law practice. Government legal officers employed in prescribed agencies (s 5) are affected by the modified application of legal profession rules under s 24.

The trust-accounting provisions in part 3.3 apply to any law practice that receives trust money in Queensland, and also to practices that have an office in Queensland but receive trust money in another jurisdiction, unless the money is dealt with under the corresponding law of a jurisdiction where the practice has an office (s 28). This means a practice with a Queensland office and no office in the receiving jurisdiction must comply with the Queensland regulation even for money received elsewhere.

Incorporated legal practices are subject to s 12, which declares the prohibition on conducting a managed investment scheme a Corporations legislation displacement provision. They must also comply with the 14-day notice period for termination of legal services under s 13. Multidisciplinary partnerships are affected by the prohibition in s 25 on a law practice or its associates acting as real estate agents for related transactions: a law practice must not provide legal services relating to a transaction if it has provided POA licensee services for that transaction.

Locally registered foreign lawyers who practise foreign law otherwise than as an associate of a law practice must provide clients with a disclosure statement about lack of fidelity fund cover (s 18), and they are subject to the trust-accounting provisions of part 3.3 of the Act and the regulation (s 16). Australian-registered foreign lawyers (not locally registered) have the trust-accounting provisions applied to them by s 16.

Clients are affected indirectly: they receive trust account statements under s 53 (unless they are sophisticated clients who direct otherwise), and they may be required to pay costs assessment costs under s 79 if the costs are not reduced by at least 15 per cent. Complainants may be required to pay an amount before a costs assessment is undertaken if the commissioner so directs (s 79(2)). Respondents to discipline applications must file notices of address for service (s 82) and comply with procedural requirements for lists of documents and affidavits (ss 87, 88). The law society is the primary body receiving notices, and the commissioner is the applicant in discipline applications.

The regulation imposes extensive duties on law practices concerning trust money. Part 3.3 division 1 is the core. A law practice that receives trust money must establish a compliant general trust account with an approved ADI if it does not already have one (s 33). The account must be kept in Queensland and the name must include ‘law practice trust account’ or ‘law practice trust a/c’ (s 33(3)(c)). Upon receiving trust money required to be paid into a general trust account, the practice must make out a receipt in duplicate (or record the particulars by computer program) within the time frames in s 34, and the receipt must contain nine specified particulars including the date, amount, form of money, client name, matter description, and purpose. Receipts must be consecutively numbered (s 34(7)).

Deposit records must be produced for non-direct-deposit receipts, with particulars of the deposit date, amount, composition (cheques/notes/coins), and cheque details (s 35). The practice must keep trust account receipts and payments cash books (s 39). The receipts cash book must record eight particulars for each receipt, and entries must be made within five working days (s 40). The payments cash book must record six particulars for cheques and seven for electronic funds transfers, also within five working days (s 41).

Separate trust ledger accounts must be kept for each client in each matter (s 42(1)). The title must include the person’s name and address and matter identification (s 42(2)). Each receipt, payment, and journal transfer must be recorded with detailed particulars within five working days, and the balance must be recorded after each transaction (s 42(10)). Journal transfers between trust ledger accounts require written authorisation from an authorised principal or, if unavailable, an authorised legal practitioner associate, an Australian legal practitioner with an unrestricted practising certificate, or two or more authorised associates jointly, or an external intervener (s 43(2)). The practice must keep a trust account transfer journal with consecutively numbered pages (s 43(5)).

Reconciliation statements must be prepared as at the end of each named month within 15 working days (s 44). Two statements are required: one reconciling the ADI balance with the cash book balance, and one reconciling the trust ledger balances with the cash book balance. Both must be reviewed by a principal of the law practice and annotated to evidence the review (s 44(3)). Controlled money accounts must be reconciled similarly under s 51, with a statement containing a list of accounts, balances, client names, and matter descriptions, reviewed and annotated by a principal.

Trust account statements must be given to each person for whom trust money (other than transit money) is held: after completion of the matter, upon reasonable request, or after 30 June each year, with exceptions for accounts open less than six months, zero-balance accounts with no transactions in 12 months, or statements given within 12 months with no subsequent transaction (s 53). Sophisticated clients may opt out (s 54).

Professional indemnity insurance must be at least $1.5 million inclusive of defence costs, and must comply with indemnity rules of the relevant regulatory authority (s 73). Fidelity fund contributions are prescribed for certain classes of practitioners: community legal service employees pay $10 per financial year, and volunteers pay nothing (s 75).

The regulation also confers rights. A local legal practitioner may request the regulatory authority not to include particular details in the register on grounds of special circumstances (s 10(2)). A locally registered foreign lawyer has a similar right under s 22(2). A law practice may apply to the law society for an exemption from stated requirements of part 3.3 (s 68). A respondent to a discipline application may request that the committee extend or shorten time (s 89). The commissioner may require a complainant to pay costs assessment costs in advance or agree to pay if the costs are not reduced by at least 15% (s 79(2)).

The regulation itself does not create offences; penalties for contraventions of the Act are set out in the Act. However, the regulation provides the enforcement framework. Investigations under part 4.6 of the Act are supported by s 67, which allows the chief executive to require the law society to provide information about amounts in trust accounts. The law society must comply (s 67(3)). External examinations of trust records are mandated by the Act, and the regulation prescribes who may be an external examiner (s 65) and that the report must be in the law society approved form (s 66), though the society may grant an exemption from that form (s 66(2)). The regulation also exempts a law practice from external examination if it only receives transit money or money in a PEXA source account (s 62).

Disciplinary proceedings are governed by part 4.9. A discipline application must be in the approved form and filed with the secretariat of the committee (s 80). It may relate to more than one complaint or investigation matter (s 80(2)). The commissioner must serve a copy personally on each respondent (s 81). Within 14 days, the respondent must file and serve a notice of address for service in the approved form (s 82). The committee may order substituted service (s 83). Directions hearings may be set by the committee, chairperson, or deputy chairperson (s 85). The hearing date is set by the committee (s 86). Parties must serve lists of documents at least 14 days before the hearing and make documents available for inspection (s 87). Affidavits must be filed and served no later than five days before the hearing (s 88). Noncompliance with the part by a respondent does not invalidate the proceeding unless the committee directs otherwise (s 90). The committee may waive noncompliance, set aside part or all of the proceeding, or make other orders (s 90(2)). If the commissioner has not complied, the committee may make orders under s 651 of the Act and also other appropriate orders (s 90(3), (4)).

The discipline register must include particulars prescribed by s 91: the date and jurisdiction of the person’s first and each later admission to the legal profession, and the person’s date of birth. The commissioner or law society may publicise disqualification or prohibition orders in any way considered appropriate (s 14(2)). The applicant for an order must give written notice to the corresponding authority of every other jurisdiction (s 14(3)). The notice must include the corporation or person’s name, ACN or address, and date of the order, and may include other relevant information or a copy of the order (s 14(4), (5)).

Fidelity fund claims are subject to a capped amount of $200,000 per claim (s 76). If multiple claims arise from the same default of a law practice, the total from the fund is limited to $2 million, and the law society must apportion equitably, having regard to what would have been paid without the cap and cases of hardship (s 76(3)). Interest on amounts payable from the fidelity fund is prescribed at the bank bill yield rate (s 75A). A similar rate applies to particular claims under s 787 of the Act (s 78A).

The regulation explicitly declares s 112(2) of the Act a Corporations legislation displacement provision for the Corporations Act, s 5G (s 12). This means that the prohibition on an incorporated legal practice conducting a managed investment scheme overrides any inconsistent provision of the Corporations legislation. The regulation also incorporates by reference the Acts Interpretation Act 1954 for rounding of fee units (s 2A, referring to s 48C(3) of that Act). The definition of prescribed rate for interest on unpaid legal costs is the rate under the Civil Proceedings Act 2011, s 59(3) for a money order debt (s 72).

The regulation interacts with the Property Occupations Act 2014 by prohibiting a law practice or its associates from acting as real estate agents for related transactions. The term interstate real estate agent is defined by reference to a corresponding law under that Act (s 25). The Electronic Conveyancing National Law (Queensland) is relevant for the exemption from external examination: a law practice that only receives transit money or money held in a PEXA source account is exempt (s 62). PEXA source account is defined by reference to the Electronic Conveyancing National Law (Queensland) and the Banking Act 1959 (Cwlth). The regulation also references the Legal Aid Queensland Act 1997: s 74 notes that part 3.6 of the Act does not apply to a Legal Aid lawyer performing duties under that Act, per s 72 of that Act. Section 75 prescribes classes of legal aid lawyers whose practising certificates limit them to volunteer work at a community legal service.

The Uniform Civil Procedure Rules 1999, schedule 1, item 7 sets the rate for copying documents in disciplinary proceedings (s 87(2)). The regulation’s trust-accounting provisions co-ordinate with corresponding laws of other jurisdictions: s 28 provides that the division applies to trust money received in another jurisdiction only if the practice has an office in Queensland and no office in the receiving jurisdiction, unless the money is dealt with under the corresponding law of a jurisdiction in which the practice has an office. This prevents double regulation. Section 14 requires notice of disqualification orders to be given to the corresponding authority of every other jurisdiction. Section 77 permits the law society to enter into fidelity protocols with corresponding authorities for forwarding claims and acting as agent. Section 92 provides that chapter 5 of the Act (external intervention) applies to interstate legal practitioners except those practising as barristers.

The regulation does not contain any provision overriding the Acts Interpretation Act 1954 generally, but s 34(3) notes that under s 18 of the Act, if no time is provided for doing something, it must be done as soon as practicable.

The regulation commenced on 1 September 2017 and has been amended multiple times. The earliest amendments appear in the amending table: 2018 SL No. 72 (s 19 amended, adjusting the fee for foreign lawyer registration to 325 fee units); 2018 SL No. 47 (s 75 amended to prescribe classes of local legal practitioners for fidelity fund contributions, and a transitional provision inserted as s 95 preserving the pre-amended provision for the 2017-2018 financial year); 2019 SL No. 105 (s 19 amended again, adjusting the same fee); 2020 SL No. 143 (s 19 amended); 2020 Act No. 15 s 146 (s 7 amended, adding a new paragraph (c) for representing corporations); 2021 SL No. 39 (s 74A inserted, setting maximum payment from fidelity fund for educational programs at $750,000; s 76 substituted, changing the capped amount to $200,000 per claim with a $2 million aggregate cap; s 78A inserted, prescribing interest rate for particular claims under s 787 of the Act); 2021 SL No. 84 (s 19 amended); 2022 SL No. 79 (s 2A inserted, providing rounding rules for fee units; s 19 amended); 2022 SL No. 146 (s 92A inserted, prescribing allowances and expenses for persons required to attend for examination under s 581F of the Act); 2023 SL No. 84 (s 75A inserted, prescribing interest rate for fidelity fund claims as the bank bill yield rate); 2023 Act No. 23 s 121 (s 70 amended, adding an exception to disclosure requirements for clients that are overseas-registered foreign lawyers or corporations held beneficially for the Commonwealth or a State).

The transitional provisions in part 9 division 2 (s 94) ensure that obligations under the repealed 2007 regulation continue under the corresponding provisions of the 2017 regulation if they were ongoing at commencement. Division 3 (s 95) deals specifically with the amendment to s 75 for the 2017-2018 financial year.

The regulation’s part numbering is not sequential because it mirrors the Act’s part numbers; for example, there is no part 3.1, part 3.3 is followed by part 3.4, and part 3.6 is included but part 3.5 is also present. The regulation does not cover every part of the Act.

The text of the regulation does not cite any cases or judicial decisions. As a subordinate instrument, the Legal Profession Regulation 2017 is frequently referenced in disciplinary proceedings before the Queensland Civil and Administrative Tribunal (QCAT) and the Supreme Court, but the regulation itself contains no litigation history. The regulation’s provisions on trust accounting and costs disclosure are routinely interpreted in those contexts, but the source provided does not refer to any specific case.

The regulation contains several easily overlooked traps. The rounding rule in s 2A is mandatory: fees expressed as numbers of fee units must be rounded to the nearest 5 cents (if not more than $100) or 10 cents (if more than $100 but not more than $1,000), with one-half rounded upwards. The example given: 35 fee units at $1.015 per unit yields $35.525, rounded to $35.55. Practitioners must apply this rounding method precisely.

The trust-accounting requirements are highly prescriptive. Section 31 requires that a computerised accounting system must not be capable of accepting a transaction resulting in a debit balance in a trust ledger account unless a contemporaneous record is made in a way that enables production of a separate chronological report. This means even if an overdraft occurs inadvertently, the system must capture it separately. The system must also not be capable of deleting a trust ledger account unless the balance is zero and all outstanding cheques have been presented; when deleted, a copy must be kept in permanent form (s 31(2)). The system must not permit amendment of recorded transactions except by a separately recorded amending transaction (s 31(5)), and it must require input in every field intended to receive information required by the division (s 31(6)). Many off-the-shelf accounting packages may not comply with these requirements.

The 15-working-day deadline for preparing monthly reconciliation statements (s 44) and the 5-working-day deadline for recording receipts and payments in cash books and ledgers (ss 40, 41, 42) are strict. Missing these deadlines could constitute a breach of the regulation even if no money is lost.

The prohibition on a law practice acting as a real estate agent for a related transaction (s 25) is broader than it might appear. If a local legal practitioner holds a POA licence and acts as real estate agent for the sale of a house, neither the practitioner nor any law practice of which the practitioner is an associate may provide legal services to the seller, purchaser, or any entity providing financing. This applies even if the legal work is done by a different associate of the practice.

The withdrawal of trust money for legal costs is tightly controlled. Section 58 provides four possible procedures. The default procedure requires giving a bill and then waiting 7 days for objection, and if objection is made, waiting 60 days for a costs assessment application. Alternatively, the practice may rely on a compliant costs agreement or client instructions that authorise withdrawal, but must give a request for payment or written notice before withdrawing. For reimbursement of money already paid by the practice, the same notice requirement applies. Verbal instructions must be confirmed in writing within 5 working days after withdrawal (s 58(6)). The regulation does not permit a practice to simply deduct costs from trust money without following one of these procedures.

The period for keeping trust records is 7 years after the last transaction entry or finalisation of the matter (s 59). This applies to all trust records defined in s 237(1)(a)-(m) of the Act. However, written directions under s 248(1)(a) or 251(1) of the Act are covered by separate 7-year periods in ss 36 and 49, which run from finalisation of the matter. The keeper must know which record falls under which section.

Locally registered foreign lawyers practising foreign law otherwise than as an associate of a law practice must provide a disclosure statement to clients stating they are not covered by the fidelity fund, and that Australian legal practitioners generally are covered (s 18). The statement must be in writing, in English or another language the client understands, and contain the prescribed statements. Failure to provide this statement prohibits the lawyer from practising foreign law on behalf of that client.

The chief executive can demand information about trust accounts from the law society at any time (s 67), and the society must comply. This is a broad power with no stated limitation beyond the requirement that the notice relate to information about amounts in trust accounts.

A law practice should adopt a systematic compliance program structured around the regulation’s requirements. First, establish and maintain a compliant general trust account with an approved ADI in Queensland, with the correct name (s 33). Ensure the computerised accounting system meets the capability requirements of s 31: it must prevent debit balances unless recorded separately, prevent deletion of non-zero accounts, enforce sequential numbering, and require input in all relevant fields. The system must also generate chronological records of creation, amendment, or deletion of client and matter data (s 30). Monthly backups must be made and kept in a separate location (s 32).

Upon receipt of trust money, issue a consecutively numbered receipt in duplicate (or record by computer) within the required timeframe, containing all nine required particulars (s 34). For non-direct-deposit receipts, produce a deposit record with cheque details (s 35). Record all receipts in the trust account receipts cash book within five working days (s 40). Record all payments by cheque or electronic funds transfer in the payments cash book within five working days (s 41). Maintain separate trust ledger accounts for each client matter and record each transaction within five working days, with balances after each transaction (s 42).

At the end of each named month, prepare two reconciliation statements within 15 working days: one reconciling the ADI balance with the cash book, and one reconciling trust ledger balances with the cash book. Have a principal review and annotate both statements (s 44). For controlled money, maintain a register and prepare a similar statement within 15 working days, reviewed by a principal (s 51).

Provide trust account statements to each person on whose behalf trust money is held: after matter completion, upon reasonable request during the matter, or after 30 June each year (with exceptions for inactive accounts) (s 53). Keep copies of all statements (s 53(8)). For sophisticated clients, comply with any direction not to give statements or to give them on a different basis, unless unreasonably onerous (s 54).

Apply the correct procedure before withdrawing trust money for legal costs. Either give a bill and wait 7 days (or 60 days if objection), or rely on a pre-authorising costs agreement or written client instruction combined with a request for payment or written notice of withdrawal (s 58). For reimbursement, also give a request or notice. Keep written records of instructions and confirm verbal instructions in writing within 5 working days.

Notify the law society within 14 days of establishing or closing a general trust account, and before or within 14 days of authorising or terminating an authorised signatory (s 46). During July each year, provide a list of all authorised signatories as at 1 July, unless an external examiner’s report for the period ending 31 March has already been provided (s 46(3)). If the practice closes down, ceases legal practice in Queensland, or ceases to hold trust money, give at least 14 days written notice (s 63).

Arrange for an external examination of trust records each financial period unless the practice only handles transit money or PEXA source account money (s 62). The external examiner must have prescribed qualifications (s 65) and report in the law society approved form (s 66). Maintain professional indemnity insurance of at least $1.5 million inclusive of defence costs, complying with the relevant regulatory authority’s indemnity rules (s 73).

Keep all trust records for 7 years after the last transaction entry or matter finalisation, whichever applies (s 59). Also keep any records of creation, amendment, or deletion of client data for 7 years after matter finalisation (s 60). Retain written directions for non-deposit of trust money and for controlled money for 7 years after finalisation (ss 36, 49).

If responding to a discipline application, file a notice of address for service within 14 days (s 82), serve a list of documents at least 14 days before the hearing (s 87), and file affidavits no later than 5 days before the hearing (s 88). If requiring cross-examination of an affidavit-maker, file a list of persons at least 3 days before the hearing (s 88(4)).