THE PAYMENT OF TRUST-ACCOUNT INTEREST: THE ETHICAL DUTIES OF ATTORNEYS TOWARDS THEIR CLIENTS, AND THE IMPLICATIONS OF THE NEW LEGAL PRACTICE BILL
Keywords:trust moneys, diverting the interest, duty to disclose information, interest accruing on trust moneys
It has been a long-standing practice in South Africa that interest earned on certain moneys deposited into attorneys’ trust accounts is paid over to the Attorneys Fidelity Fund. In fact, it is a legal requirement in terms of the Attorneys Act 53 of 1979, and the current version of the Legal Practice Bill. The December 2010 version of the Legal Practice Bill is the latest version of the Bill but not the final version, which is still awaited. This practice has both ethical and legal implications that have to be considered. This note will begin by looking at both the background and purpose of trust moneys received by attorneys. Then, using the KwaZulu-Natal Law Society Rules and schedules as a reference point (the KwaZulu-Natal Rules are generally representative, and in conformity with most of the rules of all the constituent law societies of the LSSA), the issue of whether the current practice of diverting the interest on trust moneys to the AFF is legally and ethically justifiable, particularly the duty to disclose information in respect of interest accruing on trust moneys, will be discussed. This will include a consideration of the proposed amendments in the new draft Legal Practice Bill.
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