Paralegals have the same trust obligations as lawyers

The rulebook does not say “lawyer”

The record-keeping provisions of By-Law 9 are written in terms of the licensee. Section 18 opens by requiring every licensee to maintain financial records recording all money and other property received and disbursed in connection with the licensee's professional business. Paralegals are licensees, so the obligation is not a lighter version of the lawyer's — it is the same obligation.

The Law Society treats it that way in its own materials: alongside the sample books and records for lawyers it publishes a separate set for paralegals, working the same journals and the same monthly comparison through a paralegal's numbers.

What a paralegal holding client money has to keep

If money is received in trust — a retainer in a Small Claims matter, funds held pending a Landlord and Tenant Board outcome, a settlement paid to you rather than the client — the full set applies:

• A trust receipts journal and a trust disbursements journal, each in date order, recording who the money came from or went to, how, how much, and why.
• A clients' trust ledger showing each client separately, with that client's receipts, disbursements and unexpended balance.
• A record of every transfer between client trust ledger accounts, with the purpose of each.
• General receipts and disbursements journals for money that is not trust money.
• A fees book, or a chronological file of billing copies.
• A monthly comparison of the trust bank balance against the total of client balances, signed by the licensee who prepared or approved it, with a client listing and a bank reconciliation supporting it.
• A record of valuable property held in trust, and the bank statements, cleared cheque images and duplicate deposit slips behind the entries.

The monthly comparison is the item most often missing, and the one most closely examined. It is also the one that cannot be reconstructed persuasively later — a comparison is evidence that balances agreed at a point in time, and a set produced all at once months afterwards cannot show that.

The rules that constrain the money itself

Beyond the books, the same constraints apply to the money. Trust funds may only leave the account for the permitted reasons, and fees may be taken only for services performed and for which a billing has been delivered. A withdrawal for one client can never exceed what is held for that client.

By-Law 9 also requires a licensee to maintain, at all times, sufficient balances on deposit in the trust accounts to meet all obligations for money held in trust for clients. “At all times” is doing real work in that sentence: a shortfall corrected the following week was still a shortfall.

Client identification applies too

By-Law 7.1's identification and verification requirements are also framed around licensees. Where a paralegal is retained to provide legal services and engages in, or gives instructions about, the receipt, payment or transfer of funds, the verification duty is triggered in the same way and on the same timing as it would be for a lawyer, along with the source-of-funds and ongoing-monitoring obligations that accompany it.

Why this gets missed

Paralegal practices are often small, frequently newer, and typically handle less trust money less often than a litigation firm does. None of that reduces the requirement, and infrequency arguably makes it harder: a comparison done every month becomes routine, while one done only in the months money happens to be held is easy to forget entirely.

The practical answer is the same as for a sole practitioner: set the books up before the first deposit rather than after the first busy month, and do the comparison on a fixed day whether or not anything moved.