84-01 : Interest on Client Trust Funds

Reference is made to the provisions of section 50(1) of The Legal Profession Act respecting interest on trust deposits and more specifically to the exceptions outlined in subsection 50(1).

Where a member (or law firm) receives money in trust from or for a client and having regard to all of the circumstances, (including the amount and the length of time for which the money can reasonably be anticipated to be held) a client should be entitled to receive interest on such money, the member should obtain written instructions from the client and deposit the money in a separate interest-bearing account and must account to the client for all of the interest earned on it.

A “specific trust investment account” is defined in Law Society Rule 5-41 as follows:

“specific trust investment account means a separate interest-bearing account opened by a member or law firm in trust for a specific client at a savings institution, and is limited to a daily interest savings account, a term deposit or a guaranteed investment certificate.”

Each situation will depend on its particular circumstances but the member should consider the cost to the client as a factor in determining the reasonableness of an investment. Depending on the circumstances of each situation, it may be considered unacceptable practice by a member of the Society to fail to make arrangements with a client so that interest will be earned by the client on money held by the member or law firm for that client.