LPC University of Law Solicitor Accounts Distinction Level

Solicitor’s Accounts notes
Assessment
 2 hour exam
 64 marks combined:
o Ledger question: In relation to the sale and purchase of a property,
probate, litigation matter or purchase of a business
o Short answer questions on the Rules
 26 marks for financial statement question
 20 marks for MCQ’s (5 questions)
 Financial Statement is ONLY in relation to the sale and purchase of property

Allowed to take into the exam
 Copy of the SRA Accounts Rules
 NO files or textbooks
 Allowed to annotate the rules and use post-it notes

Passing the exam
 Pass mark is 50%
 You will get a mark for the paper but it won’t contribute to final grade

The key rules to focus on
 Rule 2.1 – Definition of client money
Client money, 3rd parties (ie. Stakeholder money) non clients held to their order, as
agent, trustee, on account of costs,
 Rule 2.3 – Receiving client money
Pay into client acc promptly unless 2.3c (unless agreed otherwise in writing),
 Rule 4.2 – Mixed receipts
 Rule 4.3 – Transfers of client money for costs
 Rule 5 – withdrawals of client money
 Rule 7 – Interest
 Rule 8.1 – Ledgers and entries - record all dealings with client money

Tips
 Distinguish client money from firm’s own money (and money not regulated by
SRA)
 Explain how to deal with receipts:
o Paid into which bank account(s) – options?
o Treatment of disbursements.
N.B. Always be clear whether you are talking about one of the firm’s bank accounts
or its account records (ledger).

Explain how payments can be made:
- From which bank account – options?
- Treatment of disbursements

What to do with client money
 Rule 2.3 – client money must be paid into the client account promptly.
Unless: e.g.
 Rule 2.3(c) – alternative arrangements agreed in writing.

,  Rule 8.1 – all dealings with client money must be appropriately
recorded.

Topics which will be on the MCQ’s and comprehensive questions but not
client ledger:
 Interest paid on client money.
 Principle and agency methods for paying disbursements
Client ledger question

 The first thing you need to do is identify the client and matter
 Details: Ensure that the corresponding entry of the ledger is the first word
 Need to remember to put DR or CR after the balance.
 It would be breaking the SRA rules if you went into DR on the client account.
The client account should also have a balance then CR at the end.
 On the business side you are looking to put a DR.
 There is never going to be a cash entry if it is an inter-client transfer.
 Money going IN the client account – CREDIT in client ledger
 Money going OUT the client account – DEBIT in client ledger
 Money going IN the business account – CREDIT business account
 Money OWED OR GOING OUT the business account – DEBT business
account
 If you send a bill out to the client then this would be recorded on the DEBIT
column of the business side.
Exemplar ledger:

Client: Business Client
Matter:
DATE DETAILS DR CR BAL DR CR BAL
£ £ £ £ £ £




Carrying over balance
 When carrying on the balance following a finished ledger sheet, you need to
make sure you remember to put the client name and matter at the top again.
 Entry description on client ledger: Balance
 Remember to use the date from the bottom of the last page.

Client: Amy Lennon Business Client
Matter: Sale of
Summer Villa /
Purchase of Roman
Way
DATE DETAILS DR CR BAL DR CR BAL
NOV £ £ £ £ £ £
9 Balance 924DR 69,486CR

, Cash on account
 Need to remember that receiving money on account of costs is client money.
 Need to record £500 on the client side of the client ledger.
 When considering double entry, the money is coming into the account so it
would be cash.
Client: Amy Lennon Business Client
Matter: Sale of Summer
Villa / Purchase of
Roman Way
DATE DETAILS DR CR BAL DR CR BAL
OCT £ £ £ £ £ £
1 Cash. On 500 500CR
account



 So description would be: Cash. On account.

Paying a disbursement
 If you are passing official copies on without comment, then this will be a
disbursement.
 If you have money on account then you would want to pay the disbursement
from the client account.
Client: Amy Lennon Business Client
Matter: Sale of Summer
Villa / Purchase of
Roman Way
DATE DETAILS DR CR BAL DR CR BAL
OCT £ £ £ £ £ £
1 Cash. On 500 500CR
account
7 Cash. Official 14 486CR
copies
 It reduces the credit balance because we have paid some money on her
behalf.
 Pay it separately on the client ledger when you are passing it on without
comment.