Account Rules

Question 1

When must client money be returned to the client?

Answer 1

Promptly - as soon as there is no longer any proper reason to hold the funds

Question 2

How must the firm account for interest to clients

Answer 2

For a fair sum of interest on any client money they hold for them

• money held in SDDCA - firm pays the client all interest earned on the account
• money held in general client account - firm applies its interest policy to calculate a fair sum in lieu of interest to pay the clients

Question 3

How long must a law firm hold accounting records under SRA account rules?

Answer 3

All accounting records must be stored securely and retained for at least six years

Question 4

What is client money?

Answer 4

Client money is money held/received by the law firm:
a) relating to regulated services delivered to a client
b) on behalf of a third party in relation to services delivered (money held as agent, stakeholder)
c) trustee or as holder of specified office or appointment
d) fees and any unpaid disbursements if held or received prior to delivery of a bill

Question 5

What happens when a bill is issued to the client?

Answer 5

Money under (d) is only client money until a bill has been delivered to the client
- once a bill is sent to the client, the money is no longer client money

• money held/received in relation to a paid disbursement is not client money (paid disbursement = non-client money)