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Part II - Accounts Rules

4. Clients’ money to be paid into client account

1. Subject to the provisions of Rule 7 every solicitor shall-
   1. ensure that at all times the sum at the credit of the client account, or where there are more such accounts than one, the total of the sums at the credit of those accounts, shall not be less than the total of the clients’ money held by the solicitor; and
   2. pay into a client account without delay any sum of money exceeding £50 held for or received from or on behalf of a client.
2. Where money is held by the solicitor in a client account in which the name of the client is specified and where no money is due to that client by the solicitor or the amount due is less than the amount in the specified client account, the sum in that account or, as the case may be, the excess, shall not be treated as clients’ money for the purposes of paragraph (1)(a) of this Rule.
3. Nothing herein contained shall-
   1. empower a solicitor, without the express written authority of the client, to deposit any money held by the solicitor for that client with a bank or on share, deposit or other account with a building society or on loan account with a local authority in name of the solicitor for that client, except on such terms as will enable the amount of the share or deposit or loan or any part thereof to be uplifted or withdrawn on notice not exceeding one calendar month;
   2. relieve a solicitor of his responsibilities to the client to ensure that all sums belonging to that client and held in a client account in terms of these Rules are available when required for that client or for that client’s purpose; and
   3. preclude the overdrawing by a solicitor of a client account in which the name of the client for whom it is held is specified where that client has given written authority to overdraw, and an overdraft on such account shall not be taken into account to ensure compliance with paragraph (1)(a) of this Rule.

5. Other payments to client accounts

There may be paid into a client account-

1. such money belonging to the solicitor as may be necessary for the purpose of opening the account or required to ensure compliance with Rule 4(1)(a); and
2. money to replace any sum which may by mistake or accident have been withdrawn from the account.

6. Drawings from client account

1. So long as money belonging to one client is not withdrawn without his written authority for the purpose of meeting a payment to or on behalf of another client, there may be drawn from a client account-
   1. money required for payment to or on behalf of a client;
   2. money required for or to account of payment of a debt due to the solicitor by a client or in or to account of repayment of money expended by the solicitor on behalf of a client;
   3. money drawn on a client’s authority;
   4. money properly required for or to account of payment of the solicitor’s professional account against a client which has been debited to the ledger account of the client in the solicitor’s books and where a copy of said account has been rendered;
   5. money for transfer to a separate client account kept or to be kept for the client only;
   6. money which may have been paid into the account under paragraph (a) of Rule 5 and which is no longer required to ensure compliance with Rule 4(1)(a); and
   7. money which may by mistake or accident have been paid into the account.
2. Where money drawn from a client account by cheque is payable to a person’s account with any bank or building society, the cash book and ledger entries relating thereto and said cheque shall include the name of the person whose account is to be credited with the payment.

7. Exceptions from Rule 4

Notwithstanding any of the provisions of this Part of these Rules, a solicitor shall not be obliged to pay into a client account, but shall be required to record in his books, clients’ money held or received by him-

1. in the form of cash which is without delay paid in cash to the client or a third party on the client’s behalf; 
2. in the form of a cheque or draft or other bill of exchange which is endorsed over to the client or to a third party on the client’s behalf and which is not passed by the solicitor through a bank account; 
3. which he pays without delay into a separate bank, building society or local authority deposit account opened or to be opened in name of the client or of some person named by the client; 
4. which the client for his own convenience has requested the solicitor in writing to withhold from such account; 
5. for or to account of payment of a debt due to the solicitor from the client or in repayment in whole or in part of money expended by the solicitor on behalf of the client; or
6. expressly on account of a professional account incurred to the solicitor by the client, or as an agreed fee or to account of an agreed fee for business done by the solicitor for the client where a copy of said account has been rendered.

8. Accounts required to be kept in books of solicitor

1. A solicitor shall at all times keep properly written up such books and accounts as are necessary-
   1. to show all his dealing with-
      1. clients’ money held or received or paid or in any way intromitted with by him;
      2. any other money dealt with by him through a client account;
      3. any bank overdrafts or loans procured by him in his own name for behoof of a client or clients; and
      4. any other money held by the solicitor in a separate account in the title of which the client’s name is specified; and
   2. 1. to show separately in respect of each client all money of the categories specified in sub-paragraph (a) of this paragraph which is received, held or paid by him on account of that client; and
      2. to distinguish all money of the said categories received, held or paid by him from any other money received, held or paid by him.
2. Without prejudice to paragraph (1) above, this Rule shall apply to money received or payments made by a solicitor by virtue of any power of attorney in his favour.
3. All dealings referred to in paragraph (1) of this Rule shall be recorded-
   1. in a clients’ cash book, or a clients’ column of a cash book, or
   2. in a record of sums transferred from the ledger account of one client to that of another, as may be appropriate, and in addition in a clients’ ledger or a clients’ column of a ledger.
4. Every solicitor shall- 
   1. at all times keep properly written up such books and accounts as are necessary to show the true financial position of his practice; and
   2. balance his books monthly and on the last day of each accounting period.
5. The “books”, “accounts”, “ledger” and “records” referred to in these Rules shall be deemed to include loose-leaf books and such cards or other permanent records as are necessary for the operation of any system of book-keeping, mechanical or computerised.
6. Where a solicitor maintains the accounts required by these Rules on a computerized system which does not rely on a visible ledger card for its operation such system must be such that-
   1. an immediate print-out can be obtained of any account notwithstanding that immediate visual access is available; and
   2. all accounts which for any reason may require to be removed from the working store of the system must before removal be copied on to a storage medium which will enable a visual record of the detailed entries therein to be produced and be filed in alphabetical or other suitable order, indexed and retained for the period set out in paragraph (7) of this Rule.
7. A solicitor shall preserve for at least ten years from the date of the last entry therein all books and accounts kept by him under this Rule or a copy thereof in a form which will enable a visible record of the detailed entries therein to be produced from such a copy.

9. Client bank statements to be regularly reconciled

1. Every solicitor shall within one month of the coming into force of these Rules or of his commencing practice on his own account (either alone or in partnership or as an incorporated practice), and thereafter at intervals not exceeding one month, cause the balance between the client bank lodged and drawn columns of his cash book or the balance of his client bank ledger account as the case may be to be agreed with his client bank statements and shall retain such reconciliation statements showing this agreement for a period of three years from the dates they were respectively carried out.
2. On the same date or d ates specified in paragraph (1) of this Rule every solicitor shall extract from his clients’ ledger a list of balances due by him to clients and prepare a statement comparing the total of the said balances with the reconciled balance in the client bank account and retain such lists of balances and statements for a period of three years from the dates they were respectively carried out.

10. Client funds invested in specified accounts

1. Every solicitor shall within three months of the coming into force of these Rules or of his commencing practice on his own account (either alone or in partnership or as an incorporated practice), and thereafter at intervals not exceeding three months and coinciding with the date of a reconciliation in terms of Rule 9 hereof, cause the balance between the client deposited and withdrawn columns of his cash book or the balance on his client invested funds ledger account as the case may be to be agreed with his client passbooks, building society printouts, special deposit accounts, local authority deposits, joint deposits or other statements or certificates and shall retain such reconciliation statements showing this agreement for a period of three years from the dates they were respectively carried out.
2. On the same date or dates specified in paragraph (1) of this Rule every solicitor shall extract from his client ledger a list of funds invested by him in his name for specified clients and prepare a statement comparing the total of the said balances with the reconciled investment funds and retain such lists of balances and statements for a period of three years from the dates they were respectively carried out.

11. Interest to be earned for a client

1. Where a solicitor holds money for or on account of a client and, having regard to the amount of such money and the length of time for which it or any part of it is likely to be held, it is reasonable that interest should be earned for the client, the solicitor shall so soon as practicable place money or, as the case may be, such part thereof, in a separate interest bearing client account in the title of which the client’s name is specified and shall account to the client for any interest earned thereon, failing which the solicitor shall pay to the client out of his own money a sum equivalent to the interest which would have accrued for the benefit of the client if the sum he ought to have placed in such an interest bearing client account under this Rule had been so placed.
2. Without prejudice to the generality of paragraph (1) of this Rule it shall be deemed reasonable that interest should be earned for a client from the date on which a solicitor receives for or on account of the client a sum of money not less than £500 which at the time of its receipt is unlikely within two months thereafter to be either wholly disbursed or reduced by payments to a sum less than £500.
3. Without prejudice to any other remedy which may be available, any client who feels aggrieved that interest has not been paid under this Rule shall be entitled to require the solicitor to obtain a certificate from the Society as to whether or not interest ought to have been earned and, if so, the amount of such interest, and upon the issue of such certificate any interest certified to be due shall be payable by the solicitor to the client.
4. Nothing in this Rule shall affect any arrangement in writing, whenever made, between a solicitor and his client as to the application of a client’s money or interest thereon provided such arrangement was made prior to the said application.
5. For the purposes of this Rule only, money held by a solicitor for or on account of a client-
   1. for the purpose of paying stamp duty, recording dues or other outlays on behalf of the client; or
   2. for or to account of the solicitor’s professional account where said account has been rendered,
      
      shall not be regarded as clients’ money.

12. Application of Rules in case of firm of solicitors or incorporated practice

1. Each partner of a firm of solicitors or member of an incorporated practice shall be responsible for securing compliance by the firm or incorporated practice with the provisions of these Rules.
2. Without prejudice to paragraph (1) of this Rule within one month of the coming into force of these Rules or of its commencing practice on its own account every firm of solicitors or incorporated practice shall designate one or more of the partners of the firm or the directors or members of the incorporated practice as Designated Cashroom Partner or Partners who will be responsible for the supervision of the staff and systems employed by the firm or incorporated practice to carry out the provisions of these Rules and for securing compliance by the firm or incorporated practice with the provisions of these Rules.
3. Every firm of solicitors or incorporated practice shall deliver to the Council a Certificate listing the name or names of the Designated Cashroom Partner or Partners and the period or periods in respect of which he was, or they were, designated during the accounting period in respect of which the Certificate is delivered.

13. Savings of right of solicitor against client

Nothing in these Rules shall deprive a solicitor of or prejudice him with reference to any recourse or right in law, whether by way of lien, set-off, counter-claim, charge or otherwise, against monies standing to the credit of a client account or against monies due to a client by a third party.