Your 31 May Deadline is Coming
Your Law Firm’s Trust Account Examination is Due — Here’s What You Need to Know
If you’re a solicitor or law firm principal in NSW, the end of March marks more than just the close of the financial quarter. It signals the end of your trust account examination year, and with it comes a deadline that cannot be overlooked: your external examination report must be lodged with the Law Society of NSW by 31 May.
At TSP, we work with law firms across Newcastle, the Hunter Valley, and throughout NSW to complete this process efficiently and with minimum disruption to your practice. Whether your trust account is straightforward or involves significant transaction volumes, the obligation is the same, and the deadline is firm.
Here’s what you need to understand.
What Is a Trust Account Examination?
Solicitors who hold trust money on behalf of clients are required under the Legal Profession Uniform Law (NSW) to have their trust accounts externally examined every year. This is not optional. It is a compliance requirement administered by the Law Society of NSW, and failure to meet it can result in disciplinary action.
The external examination is conducted by an approved External Examiner, who reviews your trust account records and provides a written report to the Law Society. The report confirms whether your trust money has been properly received, held, and disbursed in accordance with the Legal Profession Uniform General Rules 2015.
Think of it as an independent check that gives the Law Society — and your clients — confidence that their funds are in safe hands.
Key Dates Every Law Firm Needs to Know
Your trust account examination year ends on 31 March each year. From that date, you have until 31 May to have your external examination completed and the report lodged with the Law Society of NSW.
That gives you exactly two months. In practice, that window fills up faster than you might expect, particularly if your External Examiner is working with multiple firms. Getting your records in order and engaging your examiner early is always the better approach.
What Does an External Examiner Actually Review?
During the examination, your External Examiner will review a range of trust account records, including:
your trust account receipts and payments, trust ledger accounts for each client matter, your monthly trial balances and trust account reconciliations, your trust account bank statements, and any trust account authorities or written directions given by clients.
The examiner is looking for accuracy, completeness, and compliance with the relevant rules. Discrepancies between your ledger balances and bank statements, unexplained delays in payments, or gaps in authorisation documentation are the kinds of issues that will be flagged in the report.
The good news is that for well-managed practices, the process is generally straightforward. The key is having your records properly maintained throughout the year, not just scrambling at examination time.
What Happens If Something Is Flagged?
If your External Examiner identifies a deficiency or irregularity, they are required to report it to the Law Society. A deficiency does not automatically mean disciplinary action, particularly where it results from an administrative error rather than any deliberate misuse of funds. However, it does trigger a follow-up process with the Law Society, which takes time and attention away from running your practice.
The most effective way to protect your firm is to maintain clean, compliant trust account records throughout the year. We are always happy to talk through record-keeping best practices with firms who want to get ahead of the process.
When the Deadline Has Already Passed: A Real Example
Not long ago, we were contacted by a legal firm in a situation that had become genuinely stressful. Their trust account examination had been due on 31 May, but the date had passed without lodgement, and they had since received a final notice from the Law Society of NSW with a strict submission deadline. The firm needed help, and they needed it quickly.
As registered External Examiners, we were able to step in immediately. We worked through the firm’s trust account records efficiently, ensured everything met the Law Society’s requirements, and lodged the External Examiner Report before the final deadline. The firm avoided what could have been a serious compliance matter, and the immediate pressure on their practice was lifted.
It is a situation we hope no firm finds itself in, but it is a useful reminder that even when things have not gone to plan, professional support can make a real difference. You can read the full details of how we assisted on our case studies page.
The far better outcome, of course, is getting ahead of it. If your examination year ended on 31 March and you have not yet engaged an External Examiner, please do not wait any longer.We understand that even with the best intentions, deadlines can slip. Practice pressures, staffing changes, and competing priorities mean that some firms arrive at the end of May without having completed their examination. If that sounds familiar, you are not alone, and it is not necessarily too late to act.
Why Choose a Qualified, Registered External Examiner?
Not just anyone can conduct your trust account examination. Your External Examiner must be registered with the Law Society of NSW and must be independent of your firm, meaning they cannot have a financial or personal interest that could affect their objectivity.
At TSP Accountants, both Deirdre Molloy and David Apps are registered External Examiners with the Law Society of NSW. We have been conducting trust account examinations for law firms across Newcastle and beyond for many years, and we understand what the Law Society is looking for. We conduct each examination with the care and attention it deserves, and we communicate clearly with your practice throughout the process.
Getting Ready for Your Examination
To help your examination run smoothly, it is worth reviewing a few things before your examiner arrives.
Make sure your trust account software is up to date and that your monthly reconciliations have been completed for the full examination year. Check that your client ledgers are accurate and that every trust transaction is supported by the appropriate documentation. Confirm that any unclaimed or long-standing trust balances have been properly dealt with in accordance with the rules.
If you have had any changes to your practice during the year, such as a change of principals, a merge, or a significant shift in the nature of work you handle, it is worth letting your External Examiner know in advance. Context helps us do a better job for you.
Ready to Book Your Examination?
The 31 May deadline is approaching, and examination slots fill quickly at this time of year. If you have not yet engaged an External Examiner for your 2025/26 trust account examination, now is the time to act.
TSP Accountants are registered External Examiners with the Law Society of NSW and work with law firms across NSW to complete this process with professionalism and efficiency. We are based in Newcastle and work with firms locally, across the Hunter Valley, and throughout the state.
Call us on 4926 4155 or email ad***@****************om.au to discuss your requirements and secure a time.
Frequently Asked Questions
Q: Who is required to have a trust account examination in NSW? A: Any solicitor or law firm that holds trust money on behalf of clients is required to have their trust accounts externally examined each year under the Legal Profession Uniform Law (NSW). This applies regardless of the size of your practice or the volume of trust transactions.
Q: When is the trust account examination deadline for NSW law firms? A: The trust account examination year for NSW solicitors ends on 31 March. Your External Examiner’s report must be lodged with the Law Society of NSW by 31 May each year, giving law firms a two-month window to complete the process.
Q: Who can conduct a solicitor trust account examination in NSW? A: Only a person registered as an External Examiner with the Law Society of NSW can conduct a solicitor trust account examination. Your examiner must be independent of your firm and have no financial or personal interest that could affect their objectivity. TSP’s directors Deirdre Molloy and David Apps are both registered External Examiners with the Law Society of NSW.
Q: What records will my External Examiner need to review? A: Your examiner will typically review your trust account receipts and payments, client trust ledgers, monthly reconciliations and trial balances, trust account bank statements, and any client authorities or written directions related to trust money. Having these records complete and well-organised before your examination will make the process much more efficient.
Q: What happens if my trust account examination finds a problem? A: If your External Examiner identifies a deficiency or irregularity, they are required to report it to the Law Society of NSW. The Law Society will then follow up with your practice. A genuine administrative error is treated differently from a serious compliance breach, but any issue will require a response. The best protection is maintaining clean and accurate trust account records throughout the year.
Q: How do I book a trust account examination with TSP? A: You can contact TSP Accountants directly on 4926 4155 or email ad***@****************om.au. We recommend getting in touch as early as possible, as examination slots fill up quickly in the April and May period.
Q: Do I need a trust account examination even if I hold very little trust money? A: Yes. The obligation to have your trust accounts examined is not based on the value or volume of trust money held. If you hold any trust money at any point during the examination year, the requirement applies. If you have not held trust money during the year at all, you may be able to report a nil trust account position, but you should confirm your specific obligations with the Law Society of NSW or your External Examiner.
When not at work, Deidre enjoys spending time with her husband and two children, as well as indulging in audiobooks and coffee.
Areas of Expertise:
✅ Business structuring & compliance
✅ SMSF strategy & auditing
✅ Tax planning for individuals & businesses
📧 deidrem@tspaccountants.com.au
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