SUGGESTED APPROACH
1. Is it a client or office
transaction?
o Money on SOLICITOR ACCOUNTS
account of
SRA ACCOUNTS costs =RULESclient
side
THREEoRULES: Sending a bill
1. There will always be 2
to a client =
entries for every
transactionoffice side
2. If there
2. One of each is an pair
entrywill to
make
be an in the in
entry client
a CR
column and
ledger (client sidethe other
OR
in a DR
office column
side) turn to the
3. Both
clientofledger
the double
first as
entries you make will
the client ledger’s are
be in client-side
logical DR entry in office ledger = CR entry in office cash
ledgers (client ledger ENTRIES IN THE CLIENT CR entry in office ledger = DR entry in office cash
LEDGER
3. and
Is theclient
money cash)coming
OR
Client ledger records money client has with firm
both
in or entries
going out? will be in DR entry in client ledger = CR entry in client cash
office works in the way a bank statement works (equal and in client cash
o sideIf no(office
money, is CR entry in client ledger = DR entry
ledger and office cash) opposite entry)
the client’s
o Can
debt
NEVER Money out = entry in DR column
decreasing
have a pair or
Money in = entry in CR column
increasing?
of entries
o Make where
the one
After making DR entry must find another ledger to make
is in the
relevant CR the balancing CR entry and vice versa
andclient
DR entry sidein
the and one in
relevant Office ledger records clients debts to the firm
the office
clientsideledger
o Money coming Sending bill/money out = entry in DR column
in/out = client
Paying bill/money in = entry in CR column (since debt to firm is decreasing and client has
more credit at cash
theledger
firm) or
office cash
ledger
ENTIRES INdepending
BANK ACCOUNTS on
whether it is
Withdrawing money = CR entry in office cash (balances with DR entry)
Paying money client
in =or DR office
entry in client cash (balances with CR entry in client ledger)
money
4. If no money, but still
Remember:
financialare
Ledgers transaction
logical DRs and CRs in the client ledgers work in the way you expect a
(e.g.statement
bank issuing a bill to a
to work
client) have a
o Law firm holding look to client money for a client is almost a parallel situation to a bank
see whether
holdingor not for you
money
theo client
Lawnow firm owes
client ledgers represent what is going on in the bank accounts in the
more money
same waythe to that your bank bank’s statements represent what is going on in the
firm (DEBIT ENTRIES)
bank accounts
or less
When making moneyentries,to the start with entries in CLIENT LEDGER for that client
firm (CREDIT ENTRIES)
Go to relevant cash ledger and make opposite entry e.g. office cash or client cash
5. = TWO LEDGERS WITH
RELEVANT CR AND DR
ENTRIES EXAMPLE 1: Ella Fox, an existing client, sends you £500
6. Complete the other on account of costs generally
part of the double
entry (NEVER mix STEP 1: Is this a client or office transaction?
client and office
entries)
7. Complete ‘Date’,
, - Money on account of costs = client money Rule 2.1(a)
STEP 2: As there is an entry to make in the client ledger, turn to the client ledger first i.e.
Client Ledger for Ella Fox (which includes office ledger, client ledger AND bank account
ledger including office cash and client cash)
STEP 3: £500 coming in = CR entry in client ledger
STEP 4: Need DR entry of £500 in client cash ledger under ‘Bank Accounts’ to balance CR
entry
STEP 5: Complete Date, Details and Balance
- Details
o Name of ledger where the balancing double entry is made
o Brief description
o Balancing double entry
Making entries: every EXAMPLE 2: You pay a disbursement of £50 out of
entry must have – office [cash] account on behalf of Ella Fox
1. Date
2. Details: Name of STEP 1: Is this a client or office transaction?
double entry - Office because you are using office money
ledger (in the
Details column) STEP 2: As there is an entry to make in one of the client
AND a description ledgers (the office ledger for the client in this example) turn
3. CR or DR entry to the client ledger first
4. Balance, including
whether the total STEP 3: £50 going out = DR in office ledger for client
is “CR” or “DR”
in some ledgers, STEP 4: £50 = CR entry in office cash ledger in ‘Bank
not required Accounts’
(‘Grade Out’) but
client ledger STEP 5: Complete Date, Details and Balance
(office ledger or - Details
client ledger for o Name of ledger where the balancing double
the client) has to entry is made
have running o Brief description
balance kept o Balancing double entry
SRA GUIDANCE: books
should be legible, up to RULE 2: CLIENT MONEY
date and contain
narratives alongside the Client money is defined Rule 2.1 as money held or
entries which identify and received by [the firm]:
provide adequate
information about the (a) relating to regulated services delivered by you to a
transaction client;
(b) on behalf of a third party in relation to regulated services delivered by you (such as
money held as agent, stakeholder or held to the sender’s order);
, (c) as a trustee or as the holder of a specified office or appointment, such as donee of a
power of attorney, Court of Protection deputy or trustee of an occupational pension
scheme;
(d) in respect of your fees and any unpaid disbursements if held or received prior to
delivery of a bill for the same.
Important note: Rule 2.1(d) refers to money held or received in respect of unpaid
disbursements. That means that money held or received in relation to a paid disbursement
is not client money.
Any money that is NOT client money under Rule 2.1 = office money
Rule 2.2
Rule 2.3: requires “client money to be paid promptly into a client account” exceptions –
(a) money held as a trustee of the holder of a specified office or appointment,
such as a donee of a power of attorney, Court of Protection deputy or trustee
of an occupational pension scheme does not have to be paid into a client account
if doing so would conflict with the obligations under rules or regulations relating to the
specified office or appointment;
(b) the client money represents payments from the Legal Aid Agency for your
costs (costs meaning your ‘fees and disbursements’) (‘fees’ meaning your own
charges or profit costs including any VAT element) does not have to be paid into the
client account;
(c) you agree in the individual circumstances an alternative arrangement in writing
with the client, or third party, for whom the money is held not to hold the money
in client account.
RULE 3: REQUIREMENTS FOR A CLIENT ACCOUNT
Rule 3.2(b)
Rule 3.3: solicitors should not use a client account to provide banking facilities to clients or
3rd parties & rule 3.3 states that:
- payments into
- transfers from; or
- withdrawals from
1. Is it a client or office
transaction?
o Money on SOLICITOR ACCOUNTS
account of
SRA ACCOUNTS costs =RULESclient
side
THREEoRULES: Sending a bill
1. There will always be 2
to a client =
entries for every
transactionoffice side
2. If there
2. One of each is an pair
entrywill to
make
be an in the in
entry client
a CR
column and
ledger (client sidethe other
OR
in a DR
office column
side) turn to the
3. Both
clientofledger
the double
first as
entries you make will
the client ledger’s are
be in client-side
logical DR entry in office ledger = CR entry in office cash
ledgers (client ledger ENTRIES IN THE CLIENT CR entry in office ledger = DR entry in office cash
LEDGER
3. and
Is theclient
money cash)coming
OR
Client ledger records money client has with firm
both
in or entries
going out? will be in DR entry in client ledger = CR entry in client cash
office works in the way a bank statement works (equal and in client cash
o sideIf no(office
money, is CR entry in client ledger = DR entry
ledger and office cash) opposite entry)
the client’s
o Can
debt
NEVER Money out = entry in DR column
decreasing
have a pair or
Money in = entry in CR column
increasing?
of entries
o Make where
the one
After making DR entry must find another ledger to make
is in the
relevant CR the balancing CR entry and vice versa
andclient
DR entry sidein
the and one in
relevant Office ledger records clients debts to the firm
the office
clientsideledger
o Money coming Sending bill/money out = entry in DR column
in/out = client
Paying bill/money in = entry in CR column (since debt to firm is decreasing and client has
more credit at cash
theledger
firm) or
office cash
ledger
ENTIRES INdepending
BANK ACCOUNTS on
whether it is
Withdrawing money = CR entry in office cash (balances with DR entry)
Paying money client
in =or DR office
entry in client cash (balances with CR entry in client ledger)
money
4. If no money, but still
Remember:
financialare
Ledgers transaction
logical DRs and CRs in the client ledgers work in the way you expect a
(e.g.statement
bank issuing a bill to a
to work
client) have a
o Law firm holding look to client money for a client is almost a parallel situation to a bank
see whether
holdingor not for you
money
theo client
Lawnow firm owes
client ledgers represent what is going on in the bank accounts in the
more money
same waythe to that your bank bank’s statements represent what is going on in the
firm (DEBIT ENTRIES)
bank accounts
or less
When making moneyentries,to the start with entries in CLIENT LEDGER for that client
firm (CREDIT ENTRIES)
Go to relevant cash ledger and make opposite entry e.g. office cash or client cash
5. = TWO LEDGERS WITH
RELEVANT CR AND DR
ENTRIES EXAMPLE 1: Ella Fox, an existing client, sends you £500
6. Complete the other on account of costs generally
part of the double
entry (NEVER mix STEP 1: Is this a client or office transaction?
client and office
entries)
7. Complete ‘Date’,
, - Money on account of costs = client money Rule 2.1(a)
STEP 2: As there is an entry to make in the client ledger, turn to the client ledger first i.e.
Client Ledger for Ella Fox (which includes office ledger, client ledger AND bank account
ledger including office cash and client cash)
STEP 3: £500 coming in = CR entry in client ledger
STEP 4: Need DR entry of £500 in client cash ledger under ‘Bank Accounts’ to balance CR
entry
STEP 5: Complete Date, Details and Balance
- Details
o Name of ledger where the balancing double entry is made
o Brief description
o Balancing double entry
Making entries: every EXAMPLE 2: You pay a disbursement of £50 out of
entry must have – office [cash] account on behalf of Ella Fox
1. Date
2. Details: Name of STEP 1: Is this a client or office transaction?
double entry - Office because you are using office money
ledger (in the
Details column) STEP 2: As there is an entry to make in one of the client
AND a description ledgers (the office ledger for the client in this example) turn
3. CR or DR entry to the client ledger first
4. Balance, including
whether the total STEP 3: £50 going out = DR in office ledger for client
is “CR” or “DR”
in some ledgers, STEP 4: £50 = CR entry in office cash ledger in ‘Bank
not required Accounts’
(‘Grade Out’) but
client ledger STEP 5: Complete Date, Details and Balance
(office ledger or - Details
client ledger for o Name of ledger where the balancing double
the client) has to entry is made
have running o Brief description
balance kept o Balancing double entry
SRA GUIDANCE: books
should be legible, up to RULE 2: CLIENT MONEY
date and contain
narratives alongside the Client money is defined Rule 2.1 as money held or
entries which identify and received by [the firm]:
provide adequate
information about the (a) relating to regulated services delivered by you to a
transaction client;
(b) on behalf of a third party in relation to regulated services delivered by you (such as
money held as agent, stakeholder or held to the sender’s order);
, (c) as a trustee or as the holder of a specified office or appointment, such as donee of a
power of attorney, Court of Protection deputy or trustee of an occupational pension
scheme;
(d) in respect of your fees and any unpaid disbursements if held or received prior to
delivery of a bill for the same.
Important note: Rule 2.1(d) refers to money held or received in respect of unpaid
disbursements. That means that money held or received in relation to a paid disbursement
is not client money.
Any money that is NOT client money under Rule 2.1 = office money
Rule 2.2
Rule 2.3: requires “client money to be paid promptly into a client account” exceptions –
(a) money held as a trustee of the holder of a specified office or appointment,
such as a donee of a power of attorney, Court of Protection deputy or trustee
of an occupational pension scheme does not have to be paid into a client account
if doing so would conflict with the obligations under rules or regulations relating to the
specified office or appointment;
(b) the client money represents payments from the Legal Aid Agency for your
costs (costs meaning your ‘fees and disbursements’) (‘fees’ meaning your own
charges or profit costs including any VAT element) does not have to be paid into the
client account;
(c) you agree in the individual circumstances an alternative arrangement in writing
with the client, or third party, for whom the money is held not to hold the money
in client account.
RULE 3: REQUIREMENTS FOR A CLIENT ACCOUNT
Rule 3.2(b)
Rule 3.3: solicitors should not use a client account to provide banking facilities to clients or
3rd parties & rule 3.3 states that:
- payments into
- transfers from; or
- withdrawals from
