Solicitor Accounts Flashcards
What is client money?
This belongs to the client and should be kept in a separate Client Account operated by the firm (Rule 4.1).
What is a Client Account?
This is an account at a bank in England and Wales that has the firm’s name and the word ‘client’ in its name. The account belongs to the firm, not a client.
What is non-client money?
Sometimes called ‘office money’ or the ‘the firm’s money’. All money that is not client money and belongs to the firm. It must be kept separate from client money.
This money is paid into the firm’s own bank account, sometimes called a business or office account.
What is mixed money/mixed payment?
Money that includes both client money and non-client money.
What are fees/profit costs?
The firm’s charges for the legal and other regulated professional services it provides.
What are disbursements?
Costs or expenses paid or to be paid to a third party on behalf of the client. This does not include office expenses.
Provide examples of client money.
Money received in relation to unpaid disbursements such as search fees or land registry fees
Money received from the client at the start of a transaction on account of costs
Deposit money received and held as agent/stakeholder on a property sale
Money received in respect of the firm’s fees before a bill has been sent out
Is money received in relation to a paid disbursement client money?
No, this would be non-client money and belong to the firm.
When can a firm withdraw client money from a client account?
Rule 5.1-the firm may withdraw client money from a client account for the purpose of which it is being held or following receipt of instructions from the client, or the third party for whom the money is held.
What does Rule 5.3 state in relation to withdrawals of client money from the client account?
Rule 5.3-you only withdraw client money from a client account if sufficient funds are held on behalf of that specific client or third party to make the payment, otherwise there is a serious breach of the SRA Accounts Rules.
What does Rule 4.1 state in relation to non-client money being held in the client account?
Rule 4.1-non-client money must be transferred out of the client account because client and non-client money must be kept separate.
What does Rule 4.3 state in relation to holding client money and a bill of costs?
Rule 4.3-a bill of costs must be given to a client before you transfer client money from a client account to make the payment, and any such payment must be for the specific sum and the client must have sufficient money before the transfer is made.
What does Rule 7.1 state in relation to interest on client money?
Rule 7.1-you account to clients or third parties for a fair sum of interest on any client money held by you on their behalf.
How often must the firm obtain bank statements for all client and business accounts?
Rule 8.2-at least every five weeks.
How often must the firm reconcile the bank statement balance for the client account with the cash book balance and with the client ledger total?
Rule 8.3-at least every five weeks and any differences shown must be promptly investigated and resolved.
