Personal responsibility of principals / partners / compliance partners and solicitors

• The regulations apply to all solicitors who handle client moneys.
• Cheque signatory / authoriser must include a solicitor with a practicing certificate being the sole practitioner or a partner of the firm
• Responsibility for any breach of the regulations extends to the solicitor responsible for the actual breach, and not just the principal or partners of the firm.
• The firm compliance partner is to provide specific confirmation to the Law Society, through the Form of Acknowledgement, of compliance with the regulations in respect of balancing statements, balances outstanding two years or more, review of client ledger balances for undue or unnecessary delays and back up of computerised accounting systems.

Client ledgers, balancing statements and maintaining records

• Client balancing statements must be prepared at quarterly intervals in respect of client account transactions and signed off on by the sole practitioner / compliance partner.
• Client ledger balances must be reviewed for undue or unnecessary delays in discharging client moneys and immediate action taken to clear same, where appropriate.
• A listing of client ledger balances outstanding two years or more is to be prepared at the accounting date and furnished to the Law Society by the Reporting Accountant (RA) at year end.
• A register of undertakings must be maintained.
• A register of funds held on joint deposit must be maintained.
• A record of electronic transfers must be maintained separately.
• Off-site back-ups of accounting records on computerised systems must be maintained.
• The Law Society must be notified of a deficit that cannot be rectified within seven days of the deficit coming to the solicitor’s attention.

Additional obligations to client

• Prior to withdrawing costs from the client account, a solicitor is required to notify the client in writing in accordance with Regulation 7(1)(a)(iii). The client must be notified in writing of moneys applied in satisfaction of costs.
• Clients are to be furnished with a statement of account in respect of each matter.
• Client moneys are to be returned to clients when the legal service is completed.
• Witnessed signatures to be obtained from recipients of any cash payments.
• Only funds received in respect of the provision of legal services to clients can be lodged to the client account.
• Documentary evidence of compliance with S149 to 153 of LSRA must be kept on file.

Client accounts

• Client accounts are not to be used for the purpose of borrowing from, lending to, or organising loans between clients.
• Client accounts are not to be used to hold moneys other than in respect of legal services provided, or to be provided.
• Client accounts are not to be used to hold, or to pass through, solicitors’ personal moneys.
• Transfers of fess and outlays from client to office accounts are to be related to specific clients.

Estate moneys

• It is no longer a requirement to open a separate bank account where a solicitor is acting as personal representative of an estate.
• Estate moneys to be lodged to the client account.

Interest Charges

• The Solicitors Accounts (Amendment) Regulations 2021 (SI 463 of 2021), which dealt with interest charges, have been fully incorporated into Regulation 8. Regulation 8 now deals with both interest charges and interest earned on clients moneys

Changes for Reporting Accountants

• Reporting Accountants' reports are to be filed within five months of the accounting date.
• Reporting Accountants are to test-check postings before and after accounting date and to test-check transactions before and after balancing dates.
• Reporting Accountants are to test-check that withdrawals of fees are notified to the clients.
• Reporting Accountants may report, directly to the Law Society, an opinion or a suspicion of a deficit, rather than waiting to submit annual report.
• Closing Reporting Accountants' reports are to be filed within three months of cessation.
• The Law Society can withdraw approval of a Reporting Accountant, and reasons are to be provided for withdrawal of approval of a Reporting Accountant. The Regulations set out who can act as a Reporting Accountant to a firm, and this should be reviewed to ensure compliance. The Reporting Accountant must be a member of one of the listed accountancy bodies, must have a certain level of professional indemnity insurance and must not be connected or associated as set out in Regulation 26(4)(b).

Changes for Law Society inspections

• Inspections may take place at a location other than the solicitor’s place of business: Under Regulation 39(1)(b), the Law Society may agree to a request for or require the investigation to take place at a place or places other than the place or places of business of a solicitor, if the Law Society is satisfied that there are reasonable grounds for such a request or requirement.
• Protection for Authorised officers when carrying out an inspection (e.g. the Law Society’s investigating accountants): Under Regulation 39(6), a solicitor or the partner, employee or agent of the solicitor, shall not delay, obstruct, impede, interfere with or resist an authorised person or persons in the exercise of their functions under these Regulations, or utter or send threats to, or in any way, intimidate or menace an authorised person or persons or cause the publication of the name and or address of an authorised person or persons.
• Wider enquiry by the Law Society, following an initial investigation: Under Regulation 39(8)(a), where, arising from an investigation by an authorised person…it is considered by the Law Society that a report prepared by the authorised person discloses evidence of a material breach of these Regulations…the Law Society may conduct such further investigations or make such further enquiries as the Law Society deems necessary.
• The Law Society may seek recovery of costs for its investigation of breaches of the Regulations: Under Regulation 39(8)(f), if the Law Society decides to make an application to the Legal Practitioners Disciplinary Tribunal following an identified breach of these Regulations, or such other misconduct by the solicitor, as disclosed by their accounting records (or both), the Law Society may require the solicitor to pay the costs of the investigation. Under Regulation 39(8)(g), when a solicitor, during the course of an investigation, does not provide a written response as required by regulation 9 of the Regulation of Practice Committee Regulations, and where that documentation is subsequently not filed within the time limit (as specified by the Law Society), the solicitor may inter alia be required to pay a contribution towards the Law Society’s costs, as deemed appropriate..
• Requirement to furnish an Accounting Statement or report: Under Regulation 40, when requested by the Law Society by notice in writing, a solicitor (or other) shall provide the Law Society within such time as requested (not being less than seven days) an accounting statement relating to the six month period prior to the notice, showing, in summary form: (a) a list of all client and office ledger balances, together with appropriate reconciliations up to a specified date, in respect of all clients, controlled trusts, non-controlled trusts and insolvency arrangements, or, where so specified by the Law Society in such notice, details of all transactions conducted through client and office accounts, in respect of a specified client or clients or a specified controlled trust or controlled trusts or a specified non-controlled trust or non-controlled trusts or a specified insolvency arrangement or insolvency arrangements, and (b) the balance on each client, office, controlled trust, non-controlled trust and insolvency arrangement account, as appearing on a specified date on statements from the bank at which such accounts are maintained, as adjusted for outstanding withdrawals and lodgements; (c) the balancing statement prepared by the firm on a specified date in accordance with Regulation 13(8)(a); (d) such further or other information from the accounting records of the firm that the Law Society may specify. (3) In addition to or in lieu of an accounting statement, the Law Society may also request a report by the solicitor’s reporting accountant stating: (a) whether, in the opinion of the reporting accountant, the accounting records of the solicitor…have been properly maintained and kept in accordance with these Regulations and whether the accounting records duly record the financial position of the solicitor towards each client concerned… (b) where the reporting accountant cannot provide such opinion as provided for in Regulation 40(3)(a) the reporting accountant is prevented from providing such opinion. (4) A report from a reporting accountant may, where the Law Society directs, be limited only to one or more specified clients or controlled trusts or non-controlled trusts or insolvency arrangements.  

Regulatory requirements concerning inspections change from time to time and a more comprehensive list of documentation required by the Law Society’s authorised investigating accountant and guidance materials will be provided to you in advance of an inspection. For further information on inspections, see Preparing for a Law Society Inspection.

Resources and contact

• SI: Solicitors Accounts Regulations 2023
• Webinar: A 30 minute CPD talk from Garry Clarke, Chair of the Regulation Of Practice Committee, on the regulations, which can be accessed via the Law Society’s LegalED Talks Hub. Please note: this is accessed through Learnskills, a separate platform from lawsociety.ie. You may need to create a new account to access course content.
• Email: financialregulation@lawsociety.ie