Regulatory and Compliance Training & Consultancy

New SRA Accounts Rules – Two (More) Things You Need to Know

October 2018

With the introduction of the new SRA Accounts Rules now just six months away, we take a look at some of the differences which exist between the current SRA Accounts Rules and the new version of the SRA Accounts Rules approved by the SRA Board in May 2018.

The Solicitors Accounts Rules 1998, first introduced a relaxation of the rules that allowed, in limited circumstances, client money in the form of money received for professional disbursements which have been incurred but not yet paid to be credited to office bank account rather than client bank account, provided that the professional disbursements were then paid within two days, or an equivalent sum transferred from office to client bank account within two days of receipt. This provision was included in the SRA Accounts Rules 2011 as Rule 17.1 (b) and has proven to be particularly popular amongst the larger firms. However, those firms who make use of this provision will be concerned to know that the new SRA Accounts Rules, as approved by the SRA Board, do not contain an equivalent rule, suggesting that such money will have to be paid into the client bank account instead.

Rule 17.2 of the SRA Accounts Rules 2011 requires that, prior to transferring monies from client to office bank account in respect of the firm‘s costs, the firm must first give or send a bill of costs to the client. Thus, at present, once a bill has been sent to the client, the firm does not have to wait for the bill to be received by the client before transferring costs from client to office bank account. It is enough that the bill has been sent to the client. Once again, this is an area where the application of the rules seems destined to change how some firms currently operate. Under the new SRA Accounts Rules, Rule 4.3 (a) states that where a firm is holding client money and some or all of that money will be used to cover the firm’s costs, you must give a bill of costs, or other written notification of the costs incurred, to the client or the paying party. Clarification from the SRA will be required to be certain of the interpretation, but the use of the word ‘give’ by the SRA does suggest that, when sending a bill by post it may be necessary to allow time for the bill to be delivered to the client before transferring monies from client to office bank account to cover the bill.

The two points above indicate one of the key problems with the new SRA Accounts Rules. Whilst the new rules have been reduced to just 7 pages in length, the SRA have indicated that the new rules are to be supplemented with additional guidance in numerous areas. It could be that the issues identified above will be dealt with in the guidance documents we expect the SRA to publish by mid-December at the latest. The trouble is until that guidance is published by the SRA, we will not know for certain.

If you want a more detailed insight into the changes being made to the SRA Accounts Rules, our very popular SRA Accounts Rules: A Practical Guide to Compliance training course, presented by subject expert, Richard Lane, now considers the key changes under the new SRA Accounts Rules and the impact these will have on firms.

We are also holding a one hour webinar, SRA Accounts Rules 2018: An Introduction to the New Rules, on 22 October 2018 at 11.00am which will look at the new SRA Accounts Rules in detail.

The introduction of the new SRA Accounts Rules represents the ideal opportunity to provide in-house training for all fee earners and managers as well as your accounts staff. For more information about a bespoke in-house training course for your firm please contact Richard Lane by calling now on 0330 223 5346 or by e-mail to info@lfpro.co.uk.

If you would like us to keep you updated on the latest legal regulatory and compliance news, sign up for our FREE newsletter.

LINKED ARTICLES

SRA Accounts Rules 2018 Approved by SRA Board
Draft SRA Accounts Rules 2018 Published
New SRA Guidance Improper Use of a Client Account as a Banking Facility
Residual Client Ledger Balances Tougher Regulatory Approach by the SRA