The rule that requires a dedicated client trust account

In Japan, practicing attorneys are required—by professional rules—to handle client funds in a way that clearly separates them from the attorney’s own money. One of the core mechanisms is a dedicated bank account for client funds, commonly translated in English as a client trust account. 

This framework sits alongside broader professional rules requiring attorneys to keep deposits separate from their own funds and to keep records of those deposits. 

Opening and reporting a client trust account

Below is an English translation (blog-style, for readability) of the relevant provision from the “Rules on Handling Client Funds, etc.” issued by the Japan Federation of Bar Associations (JFBA). 

Article 3 (Opening and reporting a client trust account) 

1. A member must, in preparation for holding client funds, open a dedicated account at a bank or other financial institution that is used only to manage client funds (this account is referred to below as a “client trust account”).
   However, this does not apply where the member is not performing legal work due to advanced age, study abroad, or similar reasons; where the member is an in-house attorney (as defined in Article 50 of the Basic Rules on the Duties of Practicing Attorneys) and is prohibited from accepting matters personally; or where there is otherwise no realistic possibility, over a long period, that the member will need to hold client funds. 
2. The account name for a client trust account must include wording that clearly indicates it is a client trust account (for example, wording equivalent to “trust,” “client funds,” “deposit,” etc.).
   However, this does not apply when a bank or other financial institution will not open an account under a name that includes such clarifying wording. 
3. With respect to all client trust accounts (excluding those opened for a particular client or a particular matter), the member must report the following items to the member’s local bar association. The same applies when any reported item changes:
   • The name of the bank (or other financial institution) and the branch/store
   • The type of deposit account
   • The account name (account holder name)
   • If the account name does not include wording that indicates it is a client trust account, the reason
   • The account number
4. If, under the exception in paragraph 1, the member does not open a client trust account, the member must report to the member’s local bar association that no client trust account has been opened and the reasons why. 

What this means in practice for clients

The key idea is straightforward: client funds and attorney funds must not be mixed. By requiring a client trust account and requiring reporting to the local bar association, the rules are designed to reduce the risk that poor financial management—or intentional misuse—could harm a client’s interests. 

Importantly, the client trust account rule is not “only about opening an account.” The same set of rules also provides additional safeguards, including:

• A prohibition on using client funds for purposes other than the purpose for which the funds were held. 
• Recordkeeping requirements for deposits/withdrawals (dates, amounts, purposes) and a retention period after the matter ends. 
• A duty to provide an accounting of receipts and disbursements when the client requests it, and when the relevant work ends (subject to specified exceptions). 

These duties matter for trust: they make it easier for a client to receive clear explanations about what money was received, why it was received, and how it was used. 

Bar association safeguards and monitoring

A common concern from potential clients is: “Even if there is a rule, how is it enforced?” The rules build enforcement into the system by giving local bar associations authority to inquire and investigate, and by imposing a duty on attorneys to respond.

Under the rules, a bar association may make formal inquiries and conduct an investigation into the overall status of how a member is holding client funds when certain triggers occur—such as disciplinary requests or dispute/mediation petitions related to failure to return client funds, repeated complaints about the return of funds within a defined period, or when there is a reasonable basis to believe the rules have been violated. 

When an inquiry is made, the attorney must respond promptly, in writing, and attach supporting materials (such as copies of books/ledgers, passbooks, and other required records). The rules also recognize confidentiality concerns: where case-related information (names, background details, etc.) is embedded in records, the attorney may redact those portions before responding. 

After reviewing the response, the bar association may take measures such as issuing guidance, requesting reporting on corrective actions, or—where a disciplinary ground is suspected—referring the matter into disciplinary procedures. The rules also allow the bar association to initiate disciplinary procedures if an attorney does not respond to the inquiry. 

The monitoring structure is also designed to protect privacy: officers and staff of the bar association are subject to confidentiality obligations regarding information learned through trust-account reporting and related inquiries. 

Local bar associations may add further safeguards in their own rules. For example, the Tokyo Bar Association rule includes an additional provision allowing inquiries in certain situations involving attorneys who recently received a suspension and where the bar association receives detailed information indicating violations of the client-funds rules. 

Finally, this is not only theoretical. Publicly available summaries of professional oversight include cases in which an attorney received disciplinary sanctions after failing to respond (even after repeated requests) to bar-association inquiries about trust-account inflows/outflows and related handling of client funds. 

How I handle client trust accounts at Tomimasu Law Office

At Tomimasu Law Office, I maintain and use a client trust account in accordance with the Rules on Handling Client Funds, etc. 

Please note that the bank account I designate for a payment may differ depending on the purpose of the payment. For example, attorney’s fees and client funds held in trust may be paid into different accounts.

Similarly, when I return funds to a client, the account name shown for the remittance may differ depending on the nature of the payment and the account used.

※　The client trust account is also managed with attention to Japan’s AML/CFT framework, which reflects the recommendations of the FATF. When I accept a matter, I may verify not only the client’s identity as required by applicable laws and professional rules, but also the purpose of the transaction and the nature of the funds involved as part of customer due diligence (CDD). Where necessary, I may ask for additional supporting documents. Client funds are held only to the extent necessary for the handling of the matter, and the account is not used as a pass-through account. Appropriate records are also maintained.
　In addition, there are multiple layers of safeguards intended to prevent improper use of client trust accounts, including transaction monitoring and inquiries by financial institutions, as well as account-reporting obligations and inquiry systems operated through bar associations. That said, no system can guarantee complete prevention in every individual case. If any concern arises, I respond carefully and in accordance with the applicable rules.

(General information only; not legal advice for any specific matter.)