Placement of Funds

Question 1

Exceptions to the rule that client money must be paid promptly into the client account.

Answer 1

• Solicitor is holding money as trustee or other fiduciary and paying the money would conflict with their duties.
• The money is payment received from the Legal Aid Agency
• Alternative arrangement, IN WRITING, is agreed by the client

Question 2

When may business money be placed in the client account?

Answer 2

• To open/maintain a client bank account
• To provide funds to make a payment on behalf of a client in excess of funds held for that client
• To replace any sum incorrectly withdrawn
• Mixed payments

Question 3

What are 2 ways that firms MAY deal with a mixed payment (i.e., both client money and business money)

Answer 3

1. Split the check
2. Deposit into either client account or business account, then promptly transfer

Question 4

Bookkeeping Quiz: Mixed Payments

Client sends Firm £200, where £50 business money and £150 is client money. Firm deposits into client account, then transfers to business account

Answer 4

1. Deposit into Client Account
   - Credit Client Ledger, Client Side £200
   - Debit Cash Sheet, Client Side £200
2. Transfer £50 out of the Client Account
   - Debit Client Ledger, Client Side £50
   - Credit Cash Sheet, Client Side £50
3. Transfer £50 in to the Business Account
   - Credit Client Ledger, Business Side £50
   - Debit Cash Sheet, Business Account £50

Question 5

Usually, where should firms deposit money received to cover UNPAID disbursements?

Answer 5

The Client Account