Legal practices should review their client engagement and retainer documents ahead of new Australian Solicitors’ Conduct Rules taking effect on 1 July 2026.
The changes have been introduced alongside Australia’s new anti-money laundering and counter-terrorism financing (AML CTF) regime for lawyers, but importantly apply to all solicitors, not just those providing designated services under the AML CTF Act.
The amendments clarify a solicitor’s obligations when accepting instructions, continuing to act for a client, and terminating a retainer.
Taking instructions
A revised Rule 8 now makes it explicit that solicitors must be satisfied that a client’s instructions are lawful and proper before accepting them and must continue to ensure those instructions remain lawful throughout the engagement.
For firms providing designated services under the AML CTF regime, this aligns with obligations to undertake customer due diligence before and during a client relationship.
When can a solicitor stop acting?
The changes also provide greater clarity around what constitutes “just cause” for terminating a retainer.
New provisions in Rule 13 confirm that a solicitor may cease acting where continuing the engagement would cause them to breach their ethical duties or professional responsibilities, where they can no longer act in the client’s best interests, or where the client fails to provide information required for the solicitor to meet statutory obligations.
These amendments respond in part to situations where legislation requires lawyers to disclose information to authorities while simultaneously prohibiting them from telling the client that the disclosure has occurred. In the AML CTF context, this will be relevant where a lawyer makes a Suspicious Matter Report relating to their client.
In these circumstances, continuing to act may place the solicitor in conflict with their duties of loyalty and confidentiality as well as their duty to act in the client’s best interests.
For this reason the Law Council of Australia takes the view that, under the new Rules, a lawyer who is statutorily compelled to disclose confidential client information without the client’s knowledge or consent – including through a Suspicious Matter Report – must cease to act.
New expectations for retainer agreements
A new Rule 12 of the Uniform Legal Practice (Solicitors) Rules – which apply alongside the Solicitors’ Conduct Rules – recommends that solicitors include specific wording in their retainer agreements explaining that:
- solicitors may be subject to statutory reporting and disclosure obligations;
- those obligations may require termination of the retainer in some circumstances; and
- the law may prevent the solicitor from explaining the reasons for termination.
The purpose is to ensure clients are informed of these possibilities from the outset of the engagement.
The amendments also provide greater protection for practitioners who are required to terminate a retainer in circumstances where legislation prevents them from providing further explanation to the client.
AUSTRAC expectations from 1 July
Separately, AUSTRAC has reiterated that law practices providing designated services must, by 1 July:
- enrol with AUSTRAC;
- establish an AML CTF program;
- appoint an AML compliance officer;
- train staff on AML CTF obligations; and
- be ready to report suspicious matters where required.
AUSTRAC has indicated it will take early enforcement action against businesses that wilfully fail to enrol.
The Law Society is encouraging firms providing designated services to enrol without delay and all practitioners to review their retainer agreements and engagement processes ahead of the commencement date. Further context to the amendments is available on the Law Council of Australia’s website, and you can find more information about all AML CTF regime requirements on the Law Society’s AML CTF Hub.
