In short
Under Law Society of Ontario By-Law 9, every licensee holding trust money must make a monthly comparison of the total in its trust bank accounts with the total held for all clients, explaining any difference. It is supported by a monthly client trust listing and a reconciliation of each trust bank account, signed by the licensee, and must be completed within 25 days after month end.
Key takeaways
- By-Law 9, section 18, paragraph 8 requires a monthly comparison of the total trust bank balances with the total of all client trust balances, with reasons for any difference, signed by the licensee who prepared or approved it.
- The comparison must be supported by a monthly listing of the amount held for each client and a detailed monthly reconciliation of each trust bank account.
- Section 22(2) requires the monthly comparison to be completed within 25 days after the last day of the month; if the deadline falls on a holiday it moves to the next non-holiday day.
- Journals, the clients' trust ledger, the monthly comparisons and bank records must be kept for at least ten years before the most recent fiscal year end; other By-Law 9 records for at least six years.
- Every licensee must file an Annual Report with the Law Society by March 31, including trust questions on overdrawn client ledgers, late deposits and unchanged balances.
What By-Law 9 covers
By-Law 9 is the Law Society of Ontario's by-law on financial transactions and records. It applies to every licensee, a term that covers lawyers, paralegals and firms of licensees. It sets the rules for trust accounts, cash, withdrawals, electronic transfers and the books a licensee must keep. It was most recently amended on May 1, 2026. Trust money is money received for a client: money belonging to the client, money held on the client's behalf or on their direction, and advances for fees not yet earned or disbursements not yet made.
Section 7 requires trust money to be paid immediately into a trust account at a bank listed in Schedule I or II of the Bank Act, an Ontario credit union or a registered trust corporation. Section 14 requires the licensee to keep enough money in its trust accounts at all times to meet every obligation to clients. The monthly trust comparison is how a licensee proves it has done so. For the US equivalent, see our guide to three-way trust account reconciliation.
The monthly trust comparison
Section 18, paragraph 8 requires a record, signed by the licensee who prepared or approved it, showing a comparison made monthly of the total of balances held in the trust account or accounts and the total of all unexpended balances held in trust for clients as they appear from the financial records, together with the reasons for any differences. Unexpended balances are the amounts still held for each client after all receipts and payments. The comparison must be supported by two further signed records: a detailed listing made monthly of the amount held for each client, and a detailed reconciliation made monthly of each trust bank account.
In practice this is a three-way check. The bank reconciliation proves that each trust bank account agrees with the firm's trust receipts and disbursements journals once uncleared items are allowed for. The client listing totals the clients' trust ledger. The comparison proves that the reconciled bank total and the client total agree, and records why they do not if they differ.
| Record | By-Law 9 reference | Signed |
|---|---|---|
| Monthly trust comparison with reasons for differences | s. 18, para. 8 | Yes, by the licensee who prepared or approved it |
| Monthly listing of the amount held for each client | s. 18, para. 8(i) | Yes |
| Monthly reconciliation of each trust bank account | s. 18, para. 8(ii) | Yes |
| Deadline for all three | s. 22(2) | Within 25 days after the last day of the month |
The 25-day deadline
Section 22(1) requires every By-Law 9 record to be entered and posted so as to be current at all times. The monthly comparison is the only exception: section 22(2) requires it to be created within 25 days after the last day of the month it covers. The comparison for March must therefore be completed by April 25, and for June by July 25. Under section 1(2), if the last day falls on a holiday, which includes any Saturday or Sunday and the statutory holidays listed in the by-law, the work may be done on the next day that is not a holiday.
The 25 days is a maximum, not a target. A comparison prepared on day 24 leaves no time to investigate a difference before the next month begins. Many firms complete the bank reconciliation within the first few business days of the month and the signed comparison within the second week.
The records the comparison depends on
Section 18 lists the minimum records every licensee must keep. For trust money they are a trust receipts journal, a trust disbursements journal, a clients' trust ledger showing each client's receipts, payments and unexpended balance, and a record of all transfers between client ledger accounts with the reason for each. Licensees also need bank statements, images of cleared cheques, duplicate deposit slips, and the signed requisitions and confirmations for electronic transfers. Each journal entry must show the date, the method, the person paid or received from, the amount, the purpose and the client.
Records may be kept electronically, but section 21(2) requires that a paper copy can be produced promptly when the Law Society asks. A licensee who receives cash must also keep a book of duplicate receipts under section 19. Section 4 separately prohibits accepting more than 7,500 Canadian dollars in cash from a person in respect of any one client file, subject to the exceptions in section 6.
| Record (s. 18) | Minimum retention (s. 23) |
|---|---|
| Trust receipts and trust disbursements journals (paras. 1 and 2) | Ten years before the most recent fiscal year end |
| Clients' trust ledger (para. 3) | Ten years |
| Monthly trust comparison, client listing and bank reconciliation (para. 8) | Ten years |
| Record of property other than money held in trust (para. 9) | Ten years |
| Bank statements, cleared cheques and deposit slips (para. 10) | Ten years |
| Electronic transfer requisitions and confirmations (para. 11) | Ten years |
| Record of transfers between client ledgers, general journals and fees book (paras. 4 to 7) | Six years |
Withdrawals and electronic transfers
Section 9 limits what may be withdrawn from trust: money owed to or for a client, reimbursement of money properly spent for a client, fees for which a bill has been delivered, transfers to another trust account for the same client, and money paid into trust by mistake. Section 9(3) forbids withdrawing more for a client than is held for that client at that time. Under section 8.1, money may not stay in trust for more than a minimally reasonable time after the legal services have been performed. Trust cheques may not be payable to cash or bearer.
Electronic transfers under section 12 require a unique login for each user, a signed electronic trust transfer requisition in Form 9A before the transfer, and a confirmation from the bank. By the close of the next banking day, the licensee must print the confirmation, compare it with the signed requisition, note the client and file on it, then sign and date it. A new section 7(6) requires each licensee keeping a trust account to give the Law Society an irrevocable written authorisation allowing the bank to disclose trust account information to it. For accounts already open, this is due by March 31, 2027; for new accounts, within 30 days of opening.
Worked example: the March comparison
A 20-lawyer real estate and wills firm in Ottawa holds one mixed trust account and one Teranet special trust account for registration fees and land transfer tax. On March 31 the mixed account's bank statement shows $1,064,280.00. Deposits of $42,600.00 made late on March 31 have not yet been credited, and cheques totalling $58,915.00 are outstanding. The reconciled balance is $1,047,965.00. The special account holds $12,450.00 with nothing outstanding. The total reconciled trust balance is $1,060,415.00.
The client trust listing totals $1,060,665.00, which is $250.00 more than the reconciled bank total. The firm traces the difference to a $250.00 bank service charge debited from the mixed trust account on March 28 and not yet recorded. It records the charge and replaces the $250.00 from firm funds so that no client's balance is reduced. The comparison is then signed by the partner responsible on April 9, well inside the April 25 deadline.
| Line | Amount (CAD) |
|---|---|
| Mixed trust account: bank balance at March 31 | 1,064,280.00 |
| Add: deposits not yet credited | 42,600.00 |
| Less: outstanding cheques | (58,915.00) |
| Mixed trust account: reconciled balance | 1,047,965.00 |
| Teranet special trust account: reconciled balance | 12,450.00 |
| Total reconciled trust balances | 1,060,415.00 |
| Total of client trust listing | 1,060,665.00 |
| Difference before correction | (250.00) |
| Reason: bank service charge on March 28, replaced from firm funds | 250.00 |
| Difference after correction | 0.00 |
The Annual Report and trust questions
Under Part II of By-Law 8, every licensee must file an Annual Report with the Law Society by March 31 each year through LSO Connects. A licensee who misses the deadline is in default from that date, and their licence may be administratively suspended at any time afterwards. Section 2 of the report, on financial reporting, covers trust accounts for the previous calendar year.
The Law Society's guide to the 2025 report lists questions that test whether the monthly work was done properly. Licensees must list every mixed trust account and its bank details. They must report whether any client trust ledger was overdrawn during the year and whether any trust deposit was not made by the end of the next banking day. They must also report trust balances unchanged for twelve months. A firm with twelve signed monthly comparisons can answer each question directly from its own records. Our guide to reconciliation break management sets out how to investigate each difference, and our guide to trust account reconciliation in Australia shows the same monthly check under the Uniform Law.
Safeheld reconciles client money every day for regulated firms, works every difference to its cause and keeps the record auditors ask for, and is extending that work to law firm trust accounting in Canada. If your firm holds client money under By-Law 9, talk to us about Ontario trust reconciliation.
Frequently asked questions
What is a trust comparison in Ontario?
The monthly record required by By-Law 9, section 18, paragraph 8, comparing the total in the trust bank accounts with the total held for all clients and giving reasons for any difference. It is signed by the licensee who prepared or approved it.
When is the monthly trust reconciliation due in Ontario?
Within 25 days after the last day of the month, under By-Law 9, section 22(2). If that day is a holiday, it may be done on the next day that is not a holiday.
How long must Ontario lawyers keep trust records?
At least ten years before the most recent fiscal year end for the journals, clients' trust ledger, monthly comparisons, bank records and electronic transfer records, and at least six years for the other By-Law 9 records.
What supports the monthly trust comparison?
A signed monthly listing of the amount held for each client and a signed detailed reconciliation of each trust bank account.
When is the Law Society of Ontario Annual Report due?
By March 31 each year, under Part II of By-Law 8. A licensee who misses it is in default and may be administratively suspended.
How much cash can an Ontario lawyer accept?
No more than 7,500 Canadian dollars from a person in respect of any one client file, under By-Law 9, section 4, subject to the exceptions in section 6.
References
- Law Society of Ontario, By-Law 9: Financial Transactions and Records
- Law Society of Ontario, Submit Your Annual Report
- Law Society of Ontario, Guide to the 2025 Annual Report
About Safeheld
Safeheld reconciles client money every day, resolves every difference and prepares every regulatory return for sign-off, for regulated firms in the United States, the United Kingdom, the European Union, Canada, Australia, Singapore and Hong Kong. To discuss your operations, contact us at safeheld.com/contact.
This article is for general information and does not constitute legal or regulatory advice.