Rules

Question 1

Client Account

Answer 1

Account in a bank in E&W with firm’s name and ‘client’ in name

Question 2

Non-Client Money

Answer 2

Money belonging to firm - kept separate and paid into firm’s own bank account

If in client account, must be promptly withdrawns as must be kept separate

Question 3

Disbursements

Answer 3

Costs paid or to be paid to 3rd party on behalf of client

Question 4

Client Money

Answer 4

• Unpaid disbursements
• Money recieved on account of costs at start of transaction
• Deposit money held as agent/stakeholder
• Money recieved for work before bill sent

Question 5

Availability of client money

Answer 5

Available on demand unless alternative arrangement agreed with client/3rd party

Question 6

Returning Client Money

Answer 6

Returned promptly to client/3rd party as soon as no longer proper reason to hold funds

Question 7

Withdrawing Client Money

Answer 7

• Purpose for which it is held
• Following instructions from client

Only if sufficient funds held on behalf of that specific client

Question 8

Using client money to pay firm’s costs

Answer 8

Must give bill of costs before transfering from client account be for the specific sum in bill

Question 9

Breaches of Account Rules

Answer 9

Must be corrected promptly upon discovery

Question 10

Interest on Client Money

Answer 10

Account to clients for fair sum of interest on held client money - can come to different written agreement but must provide sufficient info to give informed consent

Question 11

Records

Answer 11

• Accurate, contemporaneous and chronological accounts records
• Obtain statements for client and business accounts every 5 weeks
• Every 5wks reconcile bank statement balance with cash book and client ledger total - promptly investigate and resolve differences

Question 12

Joint Account

Answer 12

Not client accounts but all money within are client money

Question 13

Operating client’s own account as signatory

Answer 13

Solicitor acts as agent for client and manages their money

Question 14

Third Party Managed Account

Answer 14

Account held in bank in name of 3rd party which is an authorised payment institution and money is owned beneficially by 3rd party - it is not client money

Must make sure client understands what TPMA involves and right to terminate

Question 15

Accountant’s reports

Answer 15

If:
* Holding client money
* Operating joint account
* Operating client’s account as signatory

Must obtain accountant’s report for accounting period within 6 months of end of accounting period (and delivered to SRA if breach)

Must be retained for 6 years

Question 16

When accountant’s report not needed

Answer 16

• Money held is recieved from Legal Aid Agency
• Total balance does not exceed average of £10k and max of £250k