No funds yet for the Wilson Settlement. Hmm wait a minute, that’s strange, there was a debit of $5,000 and the amount in the trust account had been reduced to $481,000 3 days ago, but the balance has gone back up to $486,000.00 now and the cleared funds are available. It looks like someone has withdrawn $5000…but I only spoke to the client a couple of days ago and she didn't mention anything about needing us to disburse any funds prior to settlement next week.......
ANZ BANK ONLINE- Rich & Gray Law Practice Trust Account
I'll check the trust account ledgers and also check if one of the partners has issued an Account and taken payment for our costs for some reason...even though the conveyance fee is only $1,520.00.
•TRUST LEDGER •Jodie Elizabeth McMahon •13 Apple Tree Place, Westwood Qld 4863 •PURCHASE 56 SEAMIEST DRIVE, WESTWARD QLD 4863 •File # 17022
Mr Grayson, $5,000.00 appears to have been withdrawn from the trust account a few days ago, and $5,000 was deposited into the trust account a few days later and the available balance is now showing $486,000.00 again. As far as I’m aware the client hasn’t asked us to disburse any of their funds – the money is for her purchase settlement next week. I’ve checked the ledger and receipt book and there is nothing recorded anywhere for the $5,000.00 debit and credit. An account for our costs hasn’t been issued to the client yet either and Mrs McMahon’s legal fee is nowhere near that much. Do you know anything about this? I’m quite worried..
Oh I checked the trust account this morning and $486,000.00 is available as cleared funds. All the funds are there so it’s all good, no need to worry. I have an important client coming in shortly, so I best get back to it. Thanks Ella.
Ella Anderson is employed as a Junior Solicitor at a small property law firm in Queensland and handles all of the firm’s conveyancing transactions. Business is quiet at present and the only funds held in the firm’s trust account is $486,000.00 for the McMahon purchase settlement due next week. Ella hasn’t checked the trust account since the $486,000.00 was received 6 days ago. Ella has another purchase settlement due at the end of the week and she is expecting to receive a further $323,500.00 into the firm’s trust account any day now for the Wilson Settlement. She logs in online to the firms' trust account banking page to check whether the $323,500 has been received. The online trust account balance shows there is still only $486,000.00 in the account, and Ella was about to log off when she noticed an unusual transaction….
Ella, thank you for coming to me with this, you have done the right thing. I will investigate immediately and find out what has happened. Don't worry, I will take appropriate action.
Ella is perplexed as to why part of the client's settlement funds in the practice's trust have withdrawn and the same amount put back in a few days later. No new transactions have been recorded on the client ledger other than the initial receipt of the credit into the trust account. Ella starts to worry as she knows how important it is to maintain proper trust account records and that all debits and credits must be accounted for, and client trust money is not to be dealt with other than for the purpose provided. Ella notes no Invoices have been issued to the client for conveyancing legal fees yet.
Ok ok, yes I took the $5,000 to pay someone I owed money to, but I put it straight back in a couple of days later!! It hasn't affected anyone. I'm sorry! Please don't tell anybody, it was a one-off and it won't happen again.
Ella decides to approach her supervisor, Mr Grayson, who is a partner at the firm. She explains to him that there appears to have been an electronic transfer of $5,000 to an unknown bank account from the settlement funds held in trust on behalf of their client (Mrs McMahon).
It's all sorted now Ella, nothing for you to worry about.
It’s ok Ella, the full funds are in the account ready for settlement, I'll take a look at the ledger and receipts. We don’t need to involve the Law Society. Keep up the good work Ella!
But what happened? The transactions needs to be correctly receipted and recorded on the ledger. Our records aren't accurate! And we need to notify the law Society about the irregularity....
Ella leaves Mr Grayson’s office, but she feels that he didn’t adequately deal with the issue, and she remembers from her law studies that unusual withdrawals from the trust account and failing to keep proper trust account records are very serious matters and there is certain action that must be taken. Ella decides to go to see the other partner, Mr Richmond and explains the situation and tells him she has already spoken to Mr Grayson but he seemed to dismiss the issue and wasn't concerned that the trust account records don't accurately reflect the transactions. Mr Richmond usually leaves the trust accounting responsibilities to Mr Grayson and doesn't have an active role in maintenance of the account.
Will you contact the Queensland Law Society? I think they should be notified...
The only persons from the firm authorised to access the trust account are Mr Richmond, Ella and Mr Grayson. Mr Richmond has a suspicion Mr Grayson may have taken the funds as Mr Grayson has been acting strange lately and mentioned not long ago he was having some financial issues and struggling to pay off a personal debt. Mr Richmond later approaches Mr Grayson and tells him he suspects it was him who took the money from the trust account.
I'm very disappointed, Jacob. I will let it go this once, but if it happens again I will report you to the Queensland Law Society and your position here will be terminated.
The next day, Mr Richmond approaches Ella and tells her that he has spoken to Mr Grayson and the trust accounting discrepancy is all sorted. The situation doesn't seem right to Ella. But she doesn't want to lose her job by going behind the partner's backs and contacting the Law Society, so she decides to let it go and carry on as normal.