Accounts Rules
Client money
1. Money received from the client “on account of costs”. Once a solicitor has been instructed in connection with a
matter, they will usually ask the client to provide money to cover the likely costs of the matter. For example, if a solicitor
has been instructed in connection with a property purchase, it is common practice for the solicitor to ask the client for
money to cover the search fees that will be incurred e.g. Land Registry fees.
2. Money received in respect of unpaid costs or expenses. This would include, for example, Stamp Duty Land Tax, Land
Registry fees and court fees which are expected to be paid in connection with a transaction, but which have not yet
been paid (because, for example completion has not happened so the Stamp Duty Land Tax payment is not due).
Rule 4.1 states: “client money has to be kept separate from money belonging to the authorised body”. ‘Authorised body’
includes a body that has been authorised by the SRA to practise as a licensed body (i.e. a body licensed under s.71(2) of
the Legal Services Act 2007 in accordance with the SRA Authorisation of Firm Rules). For the LPC you may assume any
firm of solicitors or sole practitioner is an authorised body.
Solicitors are therefore required to keep money held by the firm on behalf of clients in a separate bank account.
Office Money
There is no definition of ‘office money’ in the Rules but the money the law firm uses for its business is referred to as: e.g.
“non-client money” in the definition of ‘mixed payments’ in the Glossary; and
e.g. “money belonging to the authorised body in Rule 4.1”.
Example of office money: Barry Smith, a long-standing client of the firm, has recently instructed you in connection with
the purchase of a property. Your firm currently holds no money on behalf of Barry. You wish to pay the Land Registry to
obtain documents on behalf of Barry and, because there is no money held on his behalf, you cannot use money from the
client account. To do so would be a serious breach of the Rules; you would, in effect, be spending another client’s
money as the only money in the client account should be client money. You would also be in breach of Rule 5.3 which
states you should ‘only withdraw client money from a client account if sufficient funds are held on behalf of that specific
client or third party to make the payment’. Therefore, in these circumstances you pay the Land Registry fee out of the
office account. Barry then sends a cheque to you to reimburse you for the Land Registry fees. The cheque received from
Barry is office money (because it is a paid disbursement and therefore falls outside Rule 2.1(d)) and should be paid into
office account.
4. When should you pay money into the solicitor’s OFFICE account?
The basic rule is that office money should be paid into the office account. (There is no specific Rule to this effect, but it
can be deduced from Rules 2.3, 4.1 and 4.2).
