The Law Council of Australia has made amendments to the Australian Solicitors’ Conduct Rules (ASCR), published on 19 June 2026 and commencing 1 July 2026. These changes arrive at the same time Tranche 2 entities come under the AML/CTF regime, and they are directly connected.
Read Law Council of Australia’s 30 June media release, Guidance Note on Legal profession designated services and Guidance Note on Reporting and notice obligations.
This update was originally sent to ALPMA Members on 30 June. Join ALPMA to be the first to get helpful updates like these in the future.
What has changed
Three amendments matter for your firm.
Rule 8 (Client instructions). A solicitor must only accept and follow a client’s lawful, proper and competent instructions. Before you accept instructions from a new client, or fresh instructions from an existing one, you must be satisfied the instructions are for a lawful and proper purpose, and you may only continue to follow instructions that remain lawful, proper and competent.
Rule 12 (Retainer agreements). A new practice rule requires the retainer (engagement) agreement to inform the client, to the effect that the solicitor is subject to statutory obligations including reporting obligations that may capture confidential information; that the solicitor may terminate the retainer, and notify the client, where continuing to act would breach their duties; and that the law may prohibit the solicitor from giving reasons for that termination.
Rule 13 (Completion or termination of engagement). The rule now defines just cause to terminate to include three situations:
a) where continuing would cause the solicitor to breach their ethical duties and professional responsibilities;
b) where the solicitor can no longer act in the client’s best interests;
c) and where the client has not provided information required to fulfil the solicitor’s statutory obligations.
What it means for all matters in your firm
Taken together, these changes formalise that you act on lawful, proper instructions, and that you have a recognised basis to exit when continuing would put you in breach of your duties. The Law Council has been clear the intent is not to create new ethical duties, but to clarify existing scope and to set the expectation that you tell clients up front about the statutory obligations now applying to legal practice. These changes are of general application, because the same compelled disclosure can arise under other laws, not only the AML/CTF Act. For every matter, review your engagement terms so they carry the Rule 12 disclosures.
Suggested changes to a firms engagement letter includes stating:
a) the law practice/solicitor is subject to statutory obligations, including reporting obligations that might include confidential information;
b) the law practice/solicitor may terminate the retainer (and notify the client) where continuing to act would require the law practice/solicitor to breach their ethical duties or professional responsibilities;
c) the law may prohibit the law practice/solicitor from providing reasons for terminating the retainer under the previous sub-clause.
What it means specifically for designated services under AML/CTF Regulations
If you provide a designated service and a matter triggers a suspicion you report to AUSTRAC (via SMR), you may be compelled to disclose client information while being prohibited from telling the client. The Law Council’s view is that once that happens you can no longer act in the client’s best interests or be candid, so you must withdraw, and the amended Rule 13 gives you the lawful basis to do so. Equally, if a client will not provide the customer due diligence information you are required to collect and verify, continuing to act would breach the AML/CTF Act, which is also just cause to terminate. In short, reporting on a designated service matter may leave you unable to keep acting, and unable to explain why.
Recommended action
1) If your firm provides designated services, prioritise updating your client onboarding and engagement letters to include the Rule 12 disclosures before 1 July, and brief your partners and fee earners on the reporting and termination position before a live matter forces the issue.
2) If your firm does not provide designated services, still review the changes to the SCR outlined above and update your engagement letters to include the Rule 12 disclosures.
A point of caution on certainty
The Law Council’s position is that once you lodge a report and cannot tell the client, continuing would breach your ethical duties, so you must withdraw, and that immediate termination satisfies the requirement to give reasonable notice. The rule itself is framed as just cause to terminate, which provides the lawful basis to exit. What is still being worked through across the profession is enforcement, professional indemnity cover where you cannot share the privileged material, and the exact wording that ends a retainer without tipping off. ALPMA is pursuing these items with the Law Council and AUSTRAC and will keep you updated.
This notice is general information, not legal advice. Conduct rules are adopted differently across jurisdictions, so please confirm the position and timing with your local law society and seek your own advice on your engagement terms.
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