This document summarizes the SRA Accounts Rules for handling client money. It discusses the importance of following the SRA Principles of acting with integrity, in clients' best interests, and upholding public trust. Key requirements include properly accounting for client money, safeguarding assets, and only holding client money in limited circumstances. The rules regulate how fees and disbursements are handled when paying from a client account. It identifies high risk areas and the SRA's expectations for regular reviews of accounts, reconciliations, training, and timely transaction processing and residual balance return.

1. SRA Accounts Rules
Accounts for the non-Accountant!

2. Richard Lane
Director of Legal Finance Professionals Limited
Consultant at Jonathon Bray Limited

3. Content
o Client Money and the Importance of the SRA
Principles
o Understanding the High Risk Areas
o The SRA’s expectations of the COFA

4. Client money and the importance of the SRA Principles
o SRA Standards & Regulations introduced 25 November 2019.
o The SRA Accounts Rules can no longer be considered in
isolation.
o Relevant Principles:
o Principle 2: You act in a way that upholds public trust and
confidence in the solicitors' profession and in legal services
provided by authorised persons.
o Principle 4: You act with honesty.
o Principle 5: You act with integrity.
o Principle 7: You must act in the best interests of each client.

5. Client money and the importance of the SRA Principles
o SRA Code of Conduct for Firms
o Properly account to clients for any financial benefit received as a result of
their instructions, except where they have agreed otherwise.
o Safeguard money and assets entrusted to you by clients and others.
o SRA Code of Conduct for Solicitors
o Limited circumstances in which a solicitor can hold client money in a
personal capacity.

6. Client money and the importance of the SRA Principles
o Rule 2 – Client Money
o "Client money" is money held or received by you:
o relating to regulated services delivered by you to a client;
o on behalf of a third party in relation to regulated services
delivered by you (such as money held as agent, stakeholder or
held to the sender's order);
o as a trustee or as the holder of a specified office or appointment,
such as donee of a power of attorney, Court of Protection deputy
or trustee of an occupational pension scheme;
o in respect of your fees and any unpaid disbursements if held or
received prior to delivery of a bill for the same.

7. Client money and the importance of the SRA Principles
o Rule 4 – Transferring costs
o Where you are holding client money and some or all of that
money will be used to pay your costs:
o you must give a bill of costs, or other written notification, to the
client or the paying party;
o this must be done before you transfer any client money
from a client account to make the payment; and
o any such payment must be for the specific sum identified
in the bill of costs or other written notification, and
covered by the amount held for the particular client or
third party.

8. Understanding the High Risk Areas
o (Proper Treatment of Fees and Disbursements)
o Providing a Banking Facility
o Residual Client Ledger Balances
o Correcting Breaches

9. The SRA’s Expectations of the COFA
o Annual reviews of systems and processes
o Weekly review of:
o client bank account reconciliations
o business bank account reconciliations
o breaches register
o Annual review:
o client money control environment
o annual review of the training requirements for staff

10. The SRA’s Expectations of the COFA
o Client and business transactions posted to the
accounting system by the end of the next day
o Residual client balances are always returned to
clients at the end of a matter
o Residual client balances at any one time are rare
o Where suspense accounts are used all entries
identified and corrected within 5 working days.

11. ANY QUESTIONS?