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Where must the following be paid into?
Money paid in full or part settlement of the solicitor's bill (or other notification of costs) that is all office money
Office account (Rule 19(1)(a)(i))
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Where must the following be paid into?
Money paid in full or part settlement of the solicitor's bill (or other notification of costs) that is only client money (e.g. unpaid professional disbursement)
Client account (Rule 19(1)(a)(ii))
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Where may the following be paid into?
Money paid in full or part settlement of the solicitor's bill (or other notification of costs) that includes both office and client money (2 options).
How else may this be dealt with?
You must follow rules 20 (rule 19(1)(a)(iii) and either:
1. Split the payment between the office and client account as appropriate (Rule 20(2)(a))
OR
2. Pay the whole amount into the client account without delay (Rule 20(2)(b)) and transfer all office money out within 14 days (Rule 20(3))
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Where must the following be paid into?
Money paid in full or part settlement of the solicitor's bill (or other notification of costs) that office money, and/or client money in the form of professional disbursements incurred but not yet paid.
What must then be done?
What is the professional disbursement has not yet been incurred?
Pay the whole sum into the office account (Rule 19(i)(b)(i)
and then
- By the end of the second working day following receipt (19(1)(b)(ii)):
- - Pay any unpaid professional disbursement OR
- - Transfer a sum for its settlement to a client account
If it is not yet incurred then the option in rule 19(1)(b) cannot be used, this is client money.
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What can also always be done with any money paid in full or part settlement of the solicitor's bill (or other notification of costs) regardless of its composition (client/office money).
But what must be done after this?
It can be paid into the client account (Rule 19(c))
Office money must be transferred out of the client account within 14 days of receipt (Rule 19(c)).
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A solicitor who receives money paid in full or part settlement of the solicitor's bill (or other notification of costs) on receipt of costs from the Legal Services Commission, follow the option in rule 21(1)(b).
What can be done with the money?
Following the rule under 21(1)(b) it may be paid into an office account provided that client money is transferred into a client account within 14 days (Rule 19(1)(d))
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Before a solicitor can take money for payment of his or her fees from money held for a client or trust in a client account, what must be done?
Solicitor must send a written bill of costs or or other written notification of the costs incurred, to the client or the paying party (Rule 19(2))
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Is a payment on account of costs generally client money or office money?
When does the money become office money?
Client money (Rule 19(4))
It becomes office money once a bill of costs, or other written notification of the costs incurred is sent to the client (Rule 19(4)) - exception under Rule 21(1)(a)) for legal aid costs.
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When does money earmarked for costs become office money?
What must then be done with the money?
Once a bill of costs or other written notification is sent to the client (Rule 19(3))
It must be transferred out of the client account within 14 days (Rule 19(3))
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Which account must the payment of an "agreed fee" be paid into?
What is an agreed fee and how must it be evidenced?
The office account (Rule 19(5))
An agreed fee is one that is fixed - not a fee that can be varied upwards, nor a fee that is dependent on the transaction being completed. An agreed fee must be evidenced in writing.
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Is money received for paid disbursements office or client money?
Office money (Rule 19 note ii)
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Is money received for unpaid professional disbursements office or client money?
Client money (Rule 19 note ii)
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Is money received for unpaid disbursements (other than professional disbursements) such as travel agents' charges, taxi fares, courier charges or Land Registry search fees, payable on credit, office or client money?
Office money (Rule 19 note ii)
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Is money received for disbursements anticipated, but not yet paid, office or client money?
Why?
Client money (Rule 19 note ii)
It is a payment on account and therefore client money.
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For electronic payments or other direct transfers from clients under Rule 19(1)(b) what may the solicitor choose to do?
What must be ensured?
To establish a system whereby clients are given an office account number for payment of costs.
The system must be capable of ensuring that, when invoices are sent to the client, no request is made for any client money, with the sole exception of money for professional disbursements already incurred but not yet paid.
Rule 19 note vi
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If option 19(1)(c) is being used - paying the whole amount into a client acount regarless of its composition -if the client is given a single account number for making direct payments by electronic or other means - what type of account must this be?
A client account (Rule 19 note vi)
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Is it a breach of rule 19 if money is not paid into an account as per Rule 19 because of a misdirected electronic payment or other direct transfer?
What are the 4 conditions linked to this?
No, as long as:
- 1. Appropriate systems are in place to ensure compliance (Rule 19 note (viii)(A) AND
- 2. Appropriate instructions were given to the client (Rule 19 note (viii)(B) AND
- 3. The client's mistake is remedied promptly upon discovery (Rule 19 note (viii)(C)) AND
- 4. Appropriate steps are taken to avoid future errors by the client (Rule 19 note (viii)(D))
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Under rules 19(2) and (3) what sums may be withdrawn from the client account?
In relation to this, what must not be done and is a breach of the rules?
Specific sums relating to the bill or other written notification of costs, and covered by the amount held for the particular client or trust.
Round sum withdrawls on account of costs.
Rule 19 note (x)
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In the case of a trust of which the only trustee(s) are within the firm, who is the paying party?
What must be kept in addition to complying with Rule 38(3))
The trustees themselves.
The solicitor must keep the original bill or notification of costs on the file.
Rule 19, note xi
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Is a bill of costs for an agreed fee necessary?
For what practical reason might such a bill be given?
No. Rule 19 note xiii
For VAT purposes
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Can undrawn costs be left in the client account?
No (Rule 19 note xii)
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What is a mixed payment?
One which includes client money as well as office money (Rule 20(1))
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What must be done with a mixed payment? (2 options)
- 1. Be split between a client account and office account as appropriate; or
- 2. Be placed without delay in a client account.
Rule 20(2)
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