Client trust accounts in Ghana: practical controls for handling clients’ money

The framework

Ghanaian legal practice is governed by the Legal Profession Act, 1960 (Act 32) and the Legal Profession (Professional Conduct and Etiquette) Rules, 2020 (L.I. 2423), under the oversight of the General Legal Council. Together they hold lawyers to strict standards of honesty in dealing with clients’ property. Read the rules on clients’ money and fees in L.I. 2423 alongside this guide: it describes good practice, not the text of the rules.

What controls should every firm have?

1. Keep client money in a separate client account. Never mix it with the firm’s operating money. Deposits and retainers held for a client belong in the client account until they are earned or paid out for the client.
2. Keep a ledger for each client. Every receipt and payment is recorded against the client and matter it belongs to, so you can always state what you hold for whom.
3. Never let a client balance go negative. Paying out more than you hold for a client means using another client’s money. A ledger should refuse it, not just flag it.
4. Don’t move money between clients. Transfers from one client’s ledger to another are a classic route to misuse. Treat them as prohibited unless you have a documented, lawful basis.
5. Require two people for withdrawals. Separate who asks for a payment from who approves it, and require a second approver (such as the managing partner) above a set amount.
6. Reconcile regularly. Match the bank statement, the client ledgers and the cash book on a fixed schedule, and investigate every difference.
7. Make records tamper-evident. Entries should be corrected by new entries, never edited in place, so the history can’t be quietly rewritten.

AML and clients’ money

Managing client money is one of the activities that brings lawyers within the Anti-Money Laundering Act, 2020 (Act 1044). A sound rule is to accept and move client funds only after due diligence is approved (see our AML & KYC guide.

How should online payments and gateway fees be handled?

Mobile money and card payments make collecting deposits easy, but gateway fees create a trap. If a GHS 10,000 deposit arrives as GHS 9,800 after fees, the client’s money has been reduced. Either have the payer cover the fee (a gross-up) or have the firm’s office account bear it; never take it from the client’s balance. Route invoice payments to the operating account and client deposits to the client account, never the other way round.

Contingency fees: handle with care

Contingency arrangements are regulated by the professional rules and are inappropriate in some kinds of matter, such as criminal and family proceedings. Check L.I. 2423 before agreeing one, put the terms in writing, and keep the fee within what the rules allow.

Frequently asked questions

Keep reading

• Billing & trust accounts in Asem: Ledgers that can’t go negative, with dual approval.
• AML & KYC for law firms: Due diligence before money moves.