Cloud-based legal practice management software has made working from anywhere much easier, providing the ability for colleagues to operate from distinct and remote locations for extended periods of time. Professional regulation across the legal profession does continue to carry an obligation to supervise and authorise the work performed by others, therefore a review of the typical monthly bookkeeping regulatory obligations may prove insightful and help practitioners extract the best out of their cloud software.
Within all States and Territories of Australia, withdrawals from trust via cheque or EFT must be shown to be effected under the direction or authority of an authorised signatory. If your practice management system has a payment requisition feature you may find the ‘authorisation’ field outputs on the printed requisition. Printing to PDF and saving within the electronic file provides a great way to demonstrate acceptance by an authorised signatory.
Practitioners in Queensland bear the additional requirement to provide written evidence including an authorised signature approving the withdrawal. The Queensland Law Society have provided advice that the ideal scenario is either a wet or digital signature on the requisition, however in light of the great number of remote workers currently in self-isolation, the Society will accept an email from an authorised signatory directing the payment may occur.
Where a client has been set up with multiple matters, it is occasionally necessary to transfer monies from one ledger to another. For example Section 46 of the Legal Profession Uniform General Rules 2015 states (in part) ‘Trust money may be transferred by journal entry from one trust ledger account in a law practice’s trust ledger to another trust ledger account, but only if the law practice is entitled to withdraw the money’. Clearly the client concerned must agree to the transfer, however it is easy for the practitioner to forget that the same internal authorisation provisions apply as they do to payments via cheque or EFT – the transfer must carry evidence of being authorised by a valid signatory (or joint signatories) of the firm. Good practice management systems will allow for the printing and electronic saving of the journal form. Firms should be diligent about recording the name of the authorising person within the body of the form.
Cloud-based practice management systems make the monthly trust reconciliation a simple process. A critical aspect of reconciling is the need to compare the bank balance, adjusted for unpresented cheques and other transactions, against the cashbook balance and the trial balance of client ledgers. Having all three parts of this comparison easily downloadable to any authorised user makes this a very simple process. Firm principals should take this opportunity to carefully review the trust trial balance and ensure funds aren’t being held unnecessarily. Once again due to current circumstances, the Queensland Law Society have approved an email from the firm principal advising review has taken place, in lieu of an actual wet signature on the report. Any trust funds being held must have a purpose, either to pay future legal costs or a schedule future disbursement. If neither of these actions are on the near horizon, return the funds to your client and seek them again closer to the due date.
Leaving aside accounting issues, practitioners should always remember that Rule 37 of the Australian Solicitors Conduct Rules 2015 states “a solicitor with designated responsibility for a matter must exercise reasonable supervision of solicitors and all other employees engaged in the provision of the legal services for that matter”. Cloud software makes this easy even when colleagues are working in remote locations. A supervising partner might sign the outgoing mail of a supervised lawyer and many documents can be signed electronically within the product. Good systems even offer ‘Comment’ functions within the electronic matter that can alert another user to review a saved document.
Supervision extends beyond reviewing how a more junior colleague handles a matter. The overall workload of the lawyer should be considered; thus timekeeping and matter-count reports are ideally reviewed. Regular meetings should of course be held and minutes taken, with all staff encouraged to raise any concerns. This is also an ideal time to receive an update on the accuracy of fee estimates or any situation where a client’s expectations are unlikely to be precisely met.
Good cloud software provides the tools for practitioners to work from remote locations in isolation yet still comply with bookkeeping regulation and supervisory requirements. Ensuring your practice is covering off on these issues may save a lot of inconvenience during both the external examination and completion of the professional indemnity application.