The Attorneys Act
Previously, in the Attorneys Act, the interest earned on any trust account funds accrued to the Law Society. However, in terms of section 78 of the Act, the interest earned on any such funds invested on the instruction of the client, in a (separate) trust investment account, accrued to the client. This investment was done in the name of the client but remained under the ambit of the trust fund, with the protection provided by the Attorneys Fidelity Fund.
The Legal Practice Act
The new position in terms of the Legal Practice Act is somewhat different. If the money is paid into the attorney’s trust account, it is protected by the Fidelity Fund with no interest benefit for the client. This is in accordance with the previous dispensation. However, if the money is invested on the instruction and for the benefit of the client, this is now a “normal” investment account in the name of the client. The client will receive interest and the account will be protected by the Banks Act, other financial sector legislation, and Reserve Bank regulations. In this instance, the Fidelity Fund will no longer play a role.
Written by Wessel de Kock