Regulation 4, 5 & 6 Summary
- Client Money should be paid into the client account without delay.Money received in respect of outlay not disbursed should be treated as client money.
- It is a breach of the regulations to pay money into (or hold money in) a client account other than client funds.
- Money beneficially due to your practice should not be held in the client account for longer than 3 months.
- Mixed Money should be first paid into the client account and then the non-client amount transferred out without delay.
Exceptions to the Regulations
- A Solicitor is not required to pay into the Client Account client's money received which is paid into a separate bank account in the name of the client.
- A Solicitor is not required to pay into the Client Account client's money received where written instructions exist from the client to pay the money into an account in the name of some other person
- Where a Solicitor is acting for a client purchasing a property and where funds received from the client are immediately required to be paid to the vendor then the money does not first need to be lodged to the client account. However, the client file must clearly record the transaction (Reg. 6(3))
Regulation 7 - A Solicitor may withdraw money from the Client Account when;
- Money is required to be paid to the client.
- Money is required to be paid to a third party on behalf of the client.
- Money is properly due to the solicitor by the client in respect of outlay actually disbursed by the solicitor on behalf of the client.
- Money is in satisfaction of the solicitors fee where it has been made clear that the client money will be applied in satisfaction of fees.
- Money is to be transferred to another client account where client instruction has been received.
- Money has been transferred into the client account in error.
- Money is to be transferred to a controlled trust account or a non-controlled trust account opened solely for the trust.
Section 7 - Interest Earned on Client Funds
- Interest earned on a client account will not normally deemed to be client money other than where the client account is held for one specific client.Interest credited to an interest bearing client account must be dealt with within three months or by the next accounting date (whichever comes first)
- Section 73 of the Solicitors Acts 1994 deals with the general liability of a solicitor to a client for interest.
- Solicitors' (Interest on Clients' Monies) regulations remain in force.
If you want to find out more about your obligations as a Solicitor in Practice, or you would like to request the free template for recording client funds then drop us a line.