Several changes have come about in the legal profession as a result of the full implementation of the Legal Practice Act, the new law that will govern the attorneys’ profession. One of these changes is that the Attorneys Fidelity Fund, which insures the public against the theft of trust money by attorneys, will now change its name to the Legal Practitioners Fidelity Fund. There is also a change in the way in which the Attorneys Fidelity Fund will receive its income, and it is now likely to get even more money.
Attorneys traditionally run 2 trust accounts into which a client’s money is paid. The first account acts as a current/transmission account and the funds that pass through this account are small or are not retained for any length of time. All the interest that accrues on this first trust account is paid to the Law Society and this money is paid into the Attorneys Fidelity Fund. This is the primary source of funding for the Fidelity Fund.
The second trust account that attorneys run is an investment account and if attorneys will be holding a client’s money for any length of time, or if the amount is substantial, the client’s money will be transferred into this second account. All the interest generated while the money is in this second account accrues to the client (less a small fee to cover the management of the account and bank charges).
From 1 March 2019, the new Legal Practice Act will now will now entitle the Fidelity Fund to take 5% of the interest that accrues on the second trust investment account, in addition to all the interest on the first current/transmission account. The additional 5% of the interest will be deducted by the banks and paid over directly to the Fidelity Fund on a monthly basis. This will no doubt boost the income of the fund but this will be at our clients’ expense.
Let’s hope the Attorneys Fidelity Fund continues to be managed wisely so that there is always money available to cover the losses suffered by the public when crooked attorneys steal their client’s money out of their trust accounts!
Miltons Matsemela Inc
Deon Welz & Storm Barry