The Gazette 1994

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 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. is not in itself breach of the Regulations, if the cheque is

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 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. financial transactions. Such documentation should include • 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; (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)). "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. It should be noted therefore that "round sum" payments/transfers Discharge of costs to solicitors or

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. 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. • 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 Interest accruing on a client account Solicitor's own money • The Solicitors Accounts Regulations permit a solicitor to

• A solicitor's accounting records should reflect the totality of

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