Trust account irregularities: who has to report, and when

A trust account irregularity has to be reported in writing to the regulator, and the duty is not only the principal's. The Uniform Law puts it on the practice's associates, its ADI, its external examiner, and in some cases on a lawyer from a different practice.

Who must report a trust account irregularity

Section 154(1) applies "As soon as practicable after" any of the following becomes aware of an irregularity:

• "a legal practitioner associate of a law practice"
• "an ADI"
• "an external examiner"
• "another entity of a kind specified in the Uniform Rules for the purposes of this section"

Once one of them "becomes aware that there is an irregularity in any of the law practice's trust accounts or trust ledger accounts, the associate, ADI, examiner or entity must give written notice of the irregularity to the designated local regulatory authority."

The civil penalty is 250 penalty units "for a corporation" and 50 penalty units "for an individual".

A lawyer from another practice

If an Australian legal practitioner believes on reasonable grounds that there is an irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice of which the practitioner is not a legal practitioner associate, the practitioner must, as soon as practicable after forming the belief, give written notice of it to the designated local regulatory authority.

That subsection also carries a civil penalty of 50 penalty units. Its trigger is a belief on reasonable grounds, and it reaches lawyers with no connection to the practice concerned, such as the solicitor on the other side of a settlement.

Causing a deficiency is a separate offence

Section 148 says a law practice, an Australian legal practitioner or any other person "must not, without reasonable excuse, cause" either "a deficiency in any trust account or trust ledger account" or "a failure to pay or deliver any trust money".

The penalty under section 148 is 500 penalty units or imprisonment for 5 years, or both. Section 154 is about telling the regulator. Section 148 is about causing the problem in the first place.

The records behind it

Section 147(2)(b) requires trust records to be kept "in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person", and section 147(2)(d) requires them to be kept "for a period of 7 years after the last transaction entry in the trust record, or the finalisation of the matter to which the trust record relates, whichever is the later."

Where the examiner asks about it

In New South Wales, the Law Society's Trust External Examiner Checklist 2026 asks "Did you submit a notification under S.154 of the Uniform Law of a trust account irregularity or suspected irregularity?" It also asks whether all overdraws or deficiencies were rectified as soon as practicable.

On the day one is found

1. Write down what was found, when, and by whom.
2. Record who decided whether it is an irregularity, and who will give the written notice.
3. Keep a copy of the notice with the trust records, ready for the external examination.

This article is general information about the Uniform Law, not legal advice, and does not take account of your practice's circumstances. It quotes the Legal Profession Uniform Law from the Victorian authorised version incorporating amendments as at 11 October 2023, and is current as at 15 September 2026. The Uniform Law applies in New South Wales, Victoria and Western Australia; other states and territories have their own legislation. Check the current legislation and the Uniform Rules before relying on any of it.