A withdrawal from a client account may be made only after a specific authority in respect of that withdrawal has been SIGNED by at least one of these people (Rule 23(1)).
Who are these categories of people? (8 categories)
- 1. A solicitor who holds a current practising certificate (Rule 23(1)(a))
- 2. A registered European lawyer (Rule 23(1)(a))
- 3. A Fellow of the Institute of Legal Executives who is a manager of the practice where the practice is a recognised body (Rule 23(1)(b))
- 4. A licensed conveyancer who is a manager of the practice, where the practice is a recognised body (Rule 23(1)(b))
- 5. A Fellow of the Institute of Legal Executives who is an employee of the practice where the practice is a recognised body (Rule 23(1)(c))
- 6. A licensed conveyancer who is an employee of the practice, where the practice is a recognised body (Rule 23(1)(c))
- 7. A registered foreign lawyer who is a manager of the practice, where the practice is a recognised body (Rule 23(1)(d))
- 8. Any other manager of the practice (Rule 23(1)(e))
When is it unnecessary to comply with Rule 23(1))?
When transferring money from one general client account to another general client account at the same bank or building society (Rule 23(2)).
In what two ways can a withdrawal from a client account in favour of the solicitor or the practice be made?
How must such a transfer NOT be made?
1. By a cheque to the solicitor or practice (Rule 23(3))
2. By way of a transfer to the office account or to the solicitor's personal account (Rule 23(3))
It must NOT be made in cash.
Under rule 23(1) may instructions be given by telephone?
What else must be done for this to be possible?
What else is important?
A specific authority must have been signed in accordance with this rule before the instructions are given.
It is of paramount importance that the scheme has appropriate in-builtsafeguards, such as passwords, to give the greatest protection possible for client money. Suitable safeguards will also be needed for practiceswhich operate a CHAPS terminal.
Rule 23 note (i)
Under rule 23(1) what is the "specific authority" given in the case of a withdrawal by cheque?
When is this not the case?
Signing the back of the cheque (Rule 23 note (ii))
When it is a blank cheque (this is not a "specific authority")
What rule must be followed when a withdrawal from a client account by way of a private loan from one client to another is made?
Rule 30(2) - Rule 23 note iii
What is it advisable to do when a withdrawal for payment to or on behalf of a client (or on behalf of a trust) is made?
Used a crossed cheque wherever possible - Rule 23 note iv
Which rule do solicitor-trustees who instruct an outside administrator to run, or continue to run, on a day to day basis, the business or propertyportfolio of an estate or trust need to comply with?
Rule 23(1), provided all cheques are retained in accordance with Rule 32(10) - Rule 23 note v
What if a sum to be transferred to a client is quite large?
What can a solicitor do if he decideds to use this method?
A direct bank transfer to the client should be considered
A modest administrative charge may be made in addition to any charge made by the bank in connection with the transfer.
Rule 23 note vi
What system can solicitors set up for the payment of Land Registry Fees?
Which account must the money come out of?
What must happen if the money is taken out of the client account using this system?
What must the solicitor be careful of?
If using this method, would it be a breach of the rules if the Land Registry took an incorrect amount in error?
and if the Solicitor failed to specify the correct amount to the Land Registry? What would the land registry need to do before taking the revised amount?
What if the land Registry contacts the solicitor by telephone, and the solicitor wishes to authorise an immediate payment by direct debit over the telephone?
A direct debit system
Either the office or the client account.
If a direct debit payment is to be taken from a client account for the payment of Land Registry application fees, the signature of a person,within one of the categories listed in rule 23(1), on the application for registration will constitute the specific authority required by rule 23(1).
Rule 23 Note vii
Care must be taken to ensure that sufficient uncommitted funds are held in the client account for the particular client before signing the authority.
Yes, if other clients’ money has been used as a result. - Rule 23 note vii
- Yes. If the Land Registry takes a sum from the solicitor’s client account greater than that specified on the application, without a specific authority for the revised sum being in place as required by rule 23. In order that the solicitor can comply with the rules, the Land Registry will need to contact the solicitor before taking the revised
- amount, so that the necessary authority may be signed prior to the revised amount being taken. - Rule 23 note viii
The solicitor must first need to check that there is sufficient money held in client account for the client and, if there is, that it is not committed to some other purpose - Rule 23, note ix
If there is a system of direct debit payment set up for payment of Land Registry fees and Where the Land Registry contacts the solicitor by telephone, and the solicitor wishes to authorise an immediate payment by direct debit over
the telephon, when can specific authority be signed?
- can be signed after the telephone call has ended but must be signed
- before the additional payment (or correct full payment) is taken by the
- Land Registry. It is advisable to sign the authority promptly and, in
- any event, on the same day as the telephone instruction is given to the
- Land Registry to take the additional (or correct full) amount. If the
- solicitor decides to fund any extra amount from the office account, the
- transfer of office money to the client account would need to be made,
- preferably on the same day but, in any event, before the direct debit
- is taken. The solicitor’s internal procedures would need to make it
- clear to unqualified staff how to deal with such situations; for
- example, who they should consult before a direct debit for an amount
- other than that specified on the application can be authorised, and the
- mechanism for ensuring the new authority is signed by a person within
- one of the categories listed in rule 23(1). - Rule 23 note x
Why might the solicitor choose to set up a direct debit account to the Land Registry from the office account?
What can be done after money is taken via this direct debit from the office account?
- Because, for example, he or she does not wish to allow the Land Registry to have access to the firm’s client account. Provided the solicitor is in funds, a transfer from the client account to the office
- account may be made under rule 22(1)(c) to reimburse the solicitor as soon as the direct debit has been taken.
Rule 23 note xi