SOLICITORS’ ACCOUNTS *Client ledgers = LOGICAL ∴ ££ into ledger = CR, out = DR
SOLICITOR ACCOUNT RULES
• Rule 1.1 Keep client ££ safe = in separate account from firm’s ££
• 1.2(a) Seperate client ££ from office ££
CLIENT ££
• 12.2 Client ££ = solicitors owes ££ to client
o (a) As trustee
o (b) As agent/stakeholder
o (d) Pay disbursements not yet incurred/paid, not professional disbursements
§ Incurred: When solicitor sends bill
o (c) Unpaid professional disbursements, e.g. ££ received from client for counsel’s fees, solicitor received
counsel’s invoice, but ≠ yet paid
§ Glossary Counsel/lawyer/expert fees, not travel agents
§ But once paid = office ££
o (e) Account of costs generally
*££ held on account of SDLT” = in client account to transfer to office. If paid = office ££.
CLIENT ACCOUNT
• 13.3 Account name must incl. ‘client’
• 13.5 General client account / separate designated client account for 1 client
WHERE TO PUT CLIENT ££?
• 14.1 Pay into client account w/o delay = 1 working day
• But exceptions:
rd
o 16.1(a) Client gives cash + solicitor pays 3 party fees ≠ pay ££ into client account
§ Record receipt + payment in client ledger
rd
o 16.1(b) Receives cheque for client from 3 party made payable to firm + endorses (signs back) = sends on
§ Record receipt as client ££: “Received cheque of £X in favour of X; sent to client” *Write CR
balance again
o 16.1(c) Client’s written instructions to not bank cheque yet + confirmed by solicitor in writing
o 17.1(b) Unpaid professional disbursement may be paid into office account, provided professional paid
in 2 working days
o Rule 29 Guidance Note (iii) Cheque ≠ payable to firm
§ Record receipt + forwarding cheque in client ledger
• 14.5 ££ must relate to solicitor’s work, not banking facilities
PAY ££ OUT OF CLIENT ACCOUNT
• 20.1 ££ out of client account:
o (a) Pay to/on client’s behalf, e.g. deposit
o (c) Pay disbursement
o (d) Reimburse office ££ spent on client’s behalf
o (e) Transfer between client accounts
o (f) Client’s written instructions to withdraw + for client’s convenience
o (i) Paying into client account = breached Rules
• 17.2 + 17.3 After sending bill to client, ££ to pay bill of costs
• Office ££ paid into client account under 17 (to settle bill of costs) + 18 (mixed payments)
OFFICE ££
• 12.7 Office ££: ££ belongs to firm
o (a) ££ to run firm, e.g. rent, salaries
o (b) Interest earned on general client account
o (c) Incurred disbursements
§ (i) ££ for fees due to firm = profit costs
§ (ii) ££ for paid disbursements
§ (iii) ££ for incurred, but unpaid disbursements
§ But unpaid professional disbursement = client ££
• 12.8 Partner’s ££ = office ££
o But if firm acts for employee / also acts for lender / buys property w/ spouse = client ££
• If no client ££, otherwise using another client’s ££ = breaches 1.2(c)
SOLICITOR ACCOUNT RULES
• Rule 1.1 Keep client ££ safe = in separate account from firm’s ££
• 1.2(a) Seperate client ££ from office ££
CLIENT ££
• 12.2 Client ££ = solicitors owes ££ to client
o (a) As trustee
o (b) As agent/stakeholder
o (d) Pay disbursements not yet incurred/paid, not professional disbursements
§ Incurred: When solicitor sends bill
o (c) Unpaid professional disbursements, e.g. ££ received from client for counsel’s fees, solicitor received
counsel’s invoice, but ≠ yet paid
§ Glossary Counsel/lawyer/expert fees, not travel agents
§ But once paid = office ££
o (e) Account of costs generally
*££ held on account of SDLT” = in client account to transfer to office. If paid = office ££.
CLIENT ACCOUNT
• 13.3 Account name must incl. ‘client’
• 13.5 General client account / separate designated client account for 1 client
WHERE TO PUT CLIENT ££?
• 14.1 Pay into client account w/o delay = 1 working day
• But exceptions:
rd
o 16.1(a) Client gives cash + solicitor pays 3 party fees ≠ pay ££ into client account
§ Record receipt + payment in client ledger
rd
o 16.1(b) Receives cheque for client from 3 party made payable to firm + endorses (signs back) = sends on
§ Record receipt as client ££: “Received cheque of £X in favour of X; sent to client” *Write CR
balance again
o 16.1(c) Client’s written instructions to not bank cheque yet + confirmed by solicitor in writing
o 17.1(b) Unpaid professional disbursement may be paid into office account, provided professional paid
in 2 working days
o Rule 29 Guidance Note (iii) Cheque ≠ payable to firm
§ Record receipt + forwarding cheque in client ledger
• 14.5 ££ must relate to solicitor’s work, not banking facilities
PAY ££ OUT OF CLIENT ACCOUNT
• 20.1 ££ out of client account:
o (a) Pay to/on client’s behalf, e.g. deposit
o (c) Pay disbursement
o (d) Reimburse office ££ spent on client’s behalf
o (e) Transfer between client accounts
o (f) Client’s written instructions to withdraw + for client’s convenience
o (i) Paying into client account = breached Rules
• 17.2 + 17.3 After sending bill to client, ££ to pay bill of costs
• Office ££ paid into client account under 17 (to settle bill of costs) + 18 (mixed payments)
OFFICE ££
• 12.7 Office ££: ££ belongs to firm
o (a) ££ to run firm, e.g. rent, salaries
o (b) Interest earned on general client account
o (c) Incurred disbursements
§ (i) ££ for fees due to firm = profit costs
§ (ii) ££ for paid disbursements
§ (iii) ££ for incurred, but unpaid disbursements
§ But unpaid professional disbursement = client ££
• 12.8 Partner’s ££ = office ££
o But if firm acts for employee / also acts for lender / buys property w/ spouse = client ££
• If no client ££, otherwise using another client’s ££ = breaches 1.2(c)
