EPR T3 A1 Email and events NSW PDF

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1.Ethics and Professional Responsibility Task 3 Activity 1

Email and events INDEX

Email from Joel Edge

2

Events occurring during Joel Edge’s absence

4

Appendix 1

11

Appendix 2

12

Appendix 3

13

Appendix 4

14

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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Email from Joel Edge

EMAIL From

:

Joel Edge (Principal)

To

:

You (an employed solicitor)

Cc

:

Alex Green

Subject

:

Arrangements during my weeks leave

I’ll be on leave in Indonesia next week. I’ll get a sim card when I arrive at the airport and let you and Alex know what the number is. Telephone and internet access will be problematic for most of the week as I’ll be in some remote parts of Lombok. Do what you can to help Alex and attend to any queries that might arise. Asher Zheng the manager of our local College Bank branch where our trust and general accounts are kept is very helpful if there is any problem. Alex has his phone number. I’ve appointed you signatory on the office and trust accounts. Just in case you are ill or for any other reason can’t operate the accounts I’ve also appointed my brother Mitchell as signatory to operate both accounts. Some of the things that you will need to attend to while I’m away (there may be others) are listed below. Tina Hudson sale to Li – This matter is scheduled to settle on Friday of next week. It is one of the first electronic conveyancing transactions we have handled so make sure it all goes smoothly. Tina has authorised Edges Solicitors to do anything necessary to complete the electronic conveyancing transaction. Tina’s property at Seabreeze is unencumbered so when settlement takes place the whole of the proceeds of sale will be paid into Tina’s personal bank account rather than into our trust account. Our costs agreement with Tina provides that Tina will pay a fixed fee of $1,800 for our costs and disbursements. I have sent a bill in advance to Tina for $1,800 on account of our costs for this matter. Dino Demarco ats Police (ledger/matter ref 13099) – Demarco’s sentencing following his guilty plea to the charge for supply of methamphetamine is about two months away. I‘ve given him an indication as to the likely sentence which includes a term of imprisonment and a substantial fine. He might want to discuss his situation with you. He still owes Karen Assi, the barrister who we briefed to appear for him at his trial, $1,200. See if you can extract that from him if he comes in. Sprowle v Davis Peaches Pty Limited – This is a claim by our clients Jack and Jill Sprowle for damages for false and misleading conduct under the Australian Consumer Law. We agreed to act and to obtain an advice as to prospects of success. Our clients agreed to pay $2000 for our costs and an estimated $3,500 for a barrister, Mark Richards, to provide his advice. The advice has been received and a copy sent to our clients a few days ago. We also sent our bill of costs as agreed. We have not yet received Mark Richards’ memo of fees. Our clients may well want to discuss the advice with you next week. If they do, please check the trust and office ledgers and the file to establish if Mark Richards’ memo has been received. Jack and Jill are good clients and usually pay our bills immediately. If any amount is outstanding please ask them to settle the account. If Mark Richards’ memo of fees has been received, arrange for that to be paid. Sonal Singh v Taylor Merdec – This is a new matter involving a dispute between our client and her neighbour Taylor Merdec. One of the issues in dispute is the location of the boundary between our client’s property and her neighbour. We are awaiting receipt of a survey report from Ivana Measure. The report is due to be received on Wednesday. In anticipation of its receipt I’ve made an EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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appointment for Sonal to come in to discuss the report with you on Wednesday afternoon. Ivana’s fees were agreed at $800.

Payne and Sanders – proposed purchase of newsagency – As you know, Jim and Valerie made offers to purchase the Seabreeze newsagency but were outbid by another husband and wife team. We advised them on the contract and incorporated a company to be the purchaser. We had money on account and billed them and were fully paid. There remains a balance in trust which they said we should retain as they were still looking for a small business to buy. Jim has just let me know they’ve given up on the idea of buying a business. He will drop in sometime next week to pick up what’s left in trust. Say hello for me.

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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Events occurring during Joel Edge’s absence

Events Here are the events that take place during Joel’s absence. You are required to answer the questions in the space provided and submit this document to your lecturer in accordance with the submission requirements. Your answers are expected to refer to the relevant legislation.

Monday Tina Hudson attends the office. She advises she has moved out of her house and the keys have been left with the agent on sale. All is ready for Fridays settlement. She gives you a cheque drawn on her personal account with Westpac for $1800 on account of our costs and disbursements as agreed. Q1 .

(a )

What should you now do with Tina’s cheque; and

(b )

Identify all of the accounting records, if any, which are required to be completed upon your receipt of that cheque?

(a) what should you now do with Tina’s cheque ●

1. this is trust money ●

s 129 LPUL - what is trust money ("trust money" is money entrusted to a law practice in the course of or in connection with the provision of legal services by the law practice, and includes-(a) money received by the law practice on account of legal costs in advance of providing the services; and)

●

○

money received? yes

○

entrusted to the law practice? Yes, it is not settled until Friday and now it is Monday, meaning that the legal service is not fully rendered and the money is not yet owing

○

received in connection with provision of legal service? yes, for the settlement

○

received in cash? - no, cheque

○

is the money received on account of legal costs in advance of providing the legal service - yes, general trust account, for the settlement

2. deposit the cheque into the general trust account, s 137 ○

s 137 LPUL - trust money to be deposited in general trust account

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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■

●

137 Certain trust money to be deposited in general trust account ●

A law practice must deposit trust money (other than cash) into the law practice's general trust account as soon as practicable after receiving it unless--

●

(a) the law practice has a written direction by a person legally entitled to provide it to deal with the money otherwise than by depositing it in the account; or

●

(b) the money is controlled money or transit money; or

●

(c) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person. ○

Civil penalty: 100 penalty units.

○

Note: Section 143 deals with trust money received in the form of cash.

3. wait five days before withdrawing money from the trust account

(b) accounting records ●

Stage 1 ○

○

Primary record: receipt issued to client as soon as possible: rule 36 ■

r 36 LPUGR - receipting of trust money [AC 201.70]

■

(1) A law practice must make out a receipt as soon as practicable after trust money is received

Primary record: cheque - deposit record - r 37 ■

■ ○

●

r 37 - LPUGR - deposit record ●

(1) If a law practice receives trust money that is required to be paid into a general trust account and the money is not paid into a general trust account by direct deposit, a deposit record must be produced to the ADI at the time the deposit is made.

●

(4) The duplicate deposit record must be kept for each deposit to the general trust account and must be kept in a deposit book or be otherwise securely filed in the order in which the deposits were made.

note: if direct deposit, r 37 not required.

We need to produce a deposit record because we received trust money through cheque not by direct deposit.

Stage 2 - Book of first entry: ○

receipt cash book (r44) 18,000

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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■

●

Book of First Entry: Receipt Cash Book (Tina, amount, RE settlement, etc.) [AC201.140] & (r 44) ●

The required details from each receipt are:

●

date receipt made out and, if different, date money received;

●

receipt number;

●

amount received;

●

form in which received (for example, bank cheque, cheque or cash);

●

name of person from whom money received;

●

client and matter details;

●

purpose for which received; and

●

ledger account to be credited.

Ledger entry ○

individual client ledger (r 47) Cr 18, 000 ■

Ledger [AC201.180- 195], r 47

Tuesday Jack Sprowle arranges to meet with you later that day. You obtain a print out of the trust and general account ledgers in the matter of Sprowle v Davis Peaches Pty Limited as set out at Appendix 1. Q 2

In relation to your bill of costs for $2,000 (the office account ledger indicates the bill was sent 2 days ago) for the initial advice: (a )

What action should you take to pay the bill?

( b )

Identify each book-keeping step you will take to pay the bill, assuming a manual book-keeping system.

(a) what action ●

if there is no objection - r 42(3)(a) ●

(3) The law practice may withdraw the trust money if the law practice has given the person a bill relating to the money and referring to the proposed withdrawal, and-○

○ ●

(a) if the person does not, at the end of the period of 7 business days after the person was given the bill, object to the amount specified in the bill, or

can withdraw at the end of that 7 business days

if there is objection - r 42(3)(b)

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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●

●

(b) if the person objects to the amount specified in the bill within the period of 7 business days after being given the bill but has not referred the matter to the designated local regulatory authority or for costs assessment, and the period of 30 days after the later of the following dates has expired-○

(i) the date on which the person was given the bill,

○

(ii) the date on which the person received an itemised bill following a request made in accordance with section 187 of the Uniform Law, or

if there is objection but the client has not referred the matter to the local regulatory authority ○

http://classic.austlii.edu.au/au/legis/nsw/consol_act/lpulaa2014406/s11.html# designated_local_regulatory_authority

○

Law Society Council

(b) identify each book-keeping step ●

●

●

●

step 1 ○

we withdraw the money from the trust account - by EFT

○

deposit into our office account

○

receipt of deposit from the transfer

client account ○

Book of first entry: withdraw must be recorded in trust payment cash book withdraw of 2,000

○

Client Trust Account Ledger: debit 2000, leave a balance of 500

office account ○

Book of first entry: office receipt cash book - credit for 2,000 dollars

○

office account ledger: credit 2000, leaving a balance of Nil.

See Appendix 1

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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You also check the Sprowle v Davis Peaches Pty Limited file, which now includes Mark Richards' memo of fees in the sum of $3,500 which was only received this morning.

Q3

Assuming the bill of costs of $2,000 has now been paid, what will you say to Jack in relation to the payment of Mark Richards’ fees? ●

alternative 1: ○

●

alternative 2: ○

●

We have received the memo of fees from Mark Richards in the amount of $3,500; you only have $500 left in your trust account, would you like us to use that 500 to pay a portion of Mark’s fee; if so, we will need you to deposit further 3000 into our trust account;

otherwise, could you give us a cheque of 3500 and we will provide it to Mark directly;

Alternative 3: ○

Lawyer - pay 3500 ourselves and ask the client to reimburse.

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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Wednesday Dino Demarco attends on you unannounced. He says to you he has sold his car as he will have no use for it if he sentenced to imprisonment. He received over $15,000 for it in cash. He wants you to invest it for him in an interest bearing account pending his sentencing so he’ll be able to pay any fine that may be imposed and any additional costs that might be incurred. He doesn’t want to be able to operate on the account as he knows he’ll only spend it. He wants only you, Joel or someone else from the practice to be able to access the money. After discussion, he gives you the cash together with a written direction to deposit the money in an interest bearing account with Westpac for a 6 month term in the name of Edges Solicitors. He also hands you $1,200 in cash and he asks you to give the cash to Karen Assi with his compliments and apologies for the delay in payment of her fees for appearing on his behalf at the trial. At Appendix 2 are forms for an Edges Solicitors Law Practice Trust Account receipt (X2) and at Appendix 3 is the form of a deposit slip of Edges Solicitors Law Practice Trust Account. Q 4

(a )

Identify the types of money you received from Dino today and what you should do with that money and give reasons.

(b )

Identify the accounting records that are required to be completed and maintained regarding the money received from Dino?

(c )

What are your reporting obligations, if any, regarding the money received from Dino?

(d )

If any money is required to be deposited to ‘Edges Solicitors trust bank account’, complete the trust account receipt in Appendix 2 and, in anticipation of banking that money into the trust bank account, complete the deposit slip in Appendix 3. (You are not required to complete receipts in duplicate).

(a) identify the types of money ●

$15,000 to be invested in an interest bearing account: ○

invest to interest-bearing account + written direction + lawyers will have exclusive control = controlled money

○

"controlled money" means money received or held by a law practice in respect of which the law practice has a written direction to deposit the money in an account (other than a general trust account) over which the law practice has or will have exclusive control: s128 & s 139 LUPL: definition of controlled money

○

s129 (2) (d) why it is trust money, why it is not investment money ●

●

received in connection with legal services - only giving money because we were representing him to invest to make sure he would be able to pay the fee.

$1,200 to Karen Assi (barrister)

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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●

○

money to give to Karen - direction to pay or deliver it to a third party (Karen) = transit money

○

("transit money" means money received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the law practice: s128)

r 36 LPUGR - receipting of trust money [AC 201.70] ○

●

(1) A law practice must make out a receipt as soon as practicable after trust money is received,

s 137 LPUL - trust money to be deposited in general trust account ○

137 Certain trust money to be deposited in general trust account ■

A law practice must deposit trust money (other than cash) into the law practice's general trust account as soon as practicable after receiving it unless--

■

(a) the law practice has a written direction by a person legally entitled to provide it to deal with the money otherwise than by depositing it in the account; or

■

(b) the money is controlled money or transit money; or

■

(c) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person. ●

Civil penalty: 100 penalty units.

●

Note: Section 143 deals with trust money received in the form of cash.

(b) what you should do with the money and reasons & accounting records

●

$15,000: ○

written direction on investment with signature ■

Dino - written direction re what he wants to do with the money - invest money in a controlled money account in [x] period

○

issue controlled money receipt r 62

○

control money account as named

○

rule 36 - receipting of trust money, rule 62 - receipt of controlled money; rule 64 register of controlled money

○

Book of First Entry: ■

Receipt Cash Book - $15,000 ●

[AC201.140] & (r 44)

●

The required details from each receipt are:

EPR T3 A1 Email and events NSW 2021_03_22 © The College of Law Limited

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○

date receipt made out and, if different, date money received;

●

receipt number;

●

amount received;

●

form in which received (for example, bank cheque, cheque or cash);

●

name of person from whom money received;

●

client and matter details;

●

purpose for which received; and

●

ledger account to be credited.

Ledger [AC201.180- 195], r 47 ■

●

●

Client (Dino) Trust Ledger (as control money): credit - $15,000

$1,200 ○

issue receipt - trust account receipt...