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Solicitors Accounts Rules 1998 Changes Published

6 March 2009

The SRA have published the draft Solicitors' Accounts (Legal Services Act) Amendment Rules [2009] which are effective from 31 March 2009.

The SAR‘s 1998 will be amended on 31 March 2009 as a result of the Legal Services Act to prepare the way for the introduction of Legal Disciplinary Practices (LDP’s) and firm-based regulation.

In summary, the main changes are as follows -

• The scope of the SAR‘s is to be extended to cover sole practitioners, partnerships, companies, LLPs, practices with non-solicitor lawyers as managers, and practices with up to 25 per cent of managers who are not legally qualified. The SAR’s will also apply to the individual managers and employees of those practices, and to in-house lawyers.

• The Legal Services Act has abolished the concept of a “controlled trust”, so all money held by a practice will be either client money or office money. This means that the same interest provisions will apply to all client money, including money previously defined as “controlled trust money”

• The statutory basis for interest certificates has been removed, so interest complaints will be dealt with by the Legal Complaints Service in future rather than by the SRA.

• The Act also enables the introduction of more flexible, risk-based provisions for the delivery of accountants' reports, and requires the introduction of a mandatory whistleblowing duty on reporting accountants.

• Various other changes have been made mainly to clarify existing provisions.

Next week, Legal Finance Professionals will be issuing a newsletter examining the changes in more detail. If you would like to receive this publication all you need to do is sign up for our newsletter on the home page of our website by clicking here.