199 / 432
GAZETTE
JULY 1994
• Banks frequently debit bank charges
to client (bank) accounts. This may
give rise to the creation of a
shortfall of clients funds in the
client (bank) account as compared
with liabilities due to clients.
Solicitors should give banks
categoric written instructions that
bank charges should not be
debited to client (bank) accounts
but should rather be debited to the
office (bank) account of the
practice.
• Each practice should be in
possession of paid cheques drawn
on its bank accounts. The Society
considers that paid cheques form
part of the records of a solicitor's
practice for the purposes of
Regulation 20. Therefore, solicitors
should arrange with their bankers
for the return of paid cheques.
Pursuant to an agreement between
the Law Society and the Irish Banks
Standing Committee, banks will
return cheques where the bank has
been so requested by individual
firms of solicitors. The numerical
completeness of cheques returned
should be checked by the practice
and cheques should be retained in
numerical sequence.
• Withdrawals of money should not
be made from client (bank) accounts
against the proceeds of an uncleared
cheque lodged to the client (bank)
account. While withdrawal of
money against an uncleared cheque
is not in itself breach of the
Regulations, if the cheque is
subsequently not "met" and the
amount drawn from the client's
account is in excess of the amount
held for that particular client, other
clients' money will have been used
to make the payment. Therefore a
breach of the Regulations will have
occurred.
• A separate client ledger account
should be maintained for each
separate client matter, i.e.
transactions relating to different
matters for the same client should
not be intermixed in the same ledger
account.
• A solicitor's accounting records
should reflect the totality of
liabilities to clients, including
liabilities to clients represented by
sums held by the solicitors in the
form of deposit receipts.
• Adequate documentation should be
retained on client files to facilitate
the vouching (
inter alia
by
authorised external accountants) of
financial transactions. Such
documentation should include
sufficient independently generated
documentation, correspondence,
receipts and acknowledgments of
payments made. In addition it is
recommended that photocopies of
cheques and drafts received for and
on behalf of clients and of cheques
and drafts paid out to or on behalf
of clients should be retained on
the file appropriate to the relevant
client matter.
Discharge of costs to solicitors
• Payment from client (bank)
accounts in discharge of costs due
to the solicitor is permitted
only
by
means of:-
(a) a cheque drawn in favour of the
solicitors;
or
(b) a transfer to a bank account in
the name of the solicitor which is
not a client (bank) account,
(Regulation 8(1)).
Moreover such payments/transfers
may be made
only
after a bill of
costs or other written intimation of
the amount of the costs incurred has
been delivered to the client
and
where it has been made clear to
the client in writing that the
money held for him is to be
applied towards the satisfaction of
the costs due, (Regulation 7
(a)(iv)).
It should be noted therefore that
"round sum" payments/transfers
"for costs" should not be made from
the solicitor's client (bank) account
unless the payments/transfers are
clearly attributable to identified
clients and the provisions of
Regulations 8(1) and 7(a)(iv) have
been fully complied with.
A record of all bills of costs and of
all written intimations of costs (as
therein defined), delivered or made
by the solicitor to clients, should be
maintained by the practice,
(Regulation 19(2)).
This requirement can best be met by
the maintenance in date
chronological order of a copy fee
note file. A copy of the bill of costs
and/or the written intimation should
also, of course, be retained on the
relevant client file.
Solicitor's own money
• The Solicitors Accounts
Regulations permit a solicitor to
keep a balance of his own money in
a client (bank) account. Where this I
situation pertains a ledger account
should be maintained in the
practice's clients ledger, in the
name of the solicitor, in which
financial transactions relating to
such monies and the balance thereof
should be recorded.
Interest accruing on a client
account
• Where interest is credited to a client
(bank)account by a bank, an
Interest Account should be
maintained in the practice's client
ledger. Interest received from the
bank should be credited to the
Interest Account and the allocation
of interest to other client ledger
accounts should be debited to the
Interest Account.
• Practitioners should be aware of a
solicitor's obligation to account to
clients for interest earned on clients'
money. The Solicitors Professional
Practice Conduct and Discipline
Regulation 1986 (S.I. No. 405 of
1986) provide,
inter alia,
that there
is an obligation on a solicitor to
account to, or to pay to a client,
interest - at the appropriate rate (as
therein defined) - in those instances
where that client's money would
have yielded interest of not less than
IR£50 (after deduction of Deposit
Interest Retention Tax), had the
client's money been paid into a
separate deposit or savings client
(Continued on page 178)
175