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Law Society reassurance on Solicitors’ Accounts Regs

The Law Society has welcomed the introduction of new Solicitors Accounts Regulations, which come into operation on 1 July.

The current regulations have been in force since 2014, and the Law Society believes the change is necessary and long overdue. It follows several years of careful review and consideration 

While the Law Society acknowledges that some solicitors may view the demands of regulatory compliance as increasingly onerous, it wishes to offer assurance that all changes to the regulations were made with due regard to the practicalities of implementing changes for practices, large and small.

Those with particular queries and concerns are asked to contact financialregulation@lawsociety.ie.

Key updates

New protections for client moneys have been added, together with further clarification of existing regulations.

The regulations will impact on solicitors, reporting accountants and Law Society investigations in the following ways:

Solicitors

• It is no longer a requirement to open a separate bank account where a solicitor is acting as the personal representative of an estate,
• Balancing statements are to be prepared at quarterly intervals in respect of client-account transactions,
• Client ledger balances are to 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 for two years or more is to be prepared at the accounting date, and furnished to the Law Society by the reporting accountant,
• 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,
• Evidence of payments in cash is to include the witnessed signature of the recipient,
• Transfers of funds from the client to the office account are to be related to specific clients,
• The Law Society is to be notified of a deficit that cannot be rectified within seven days of the deficit coming to the solicitor’s attention,
• Cheque signatories or transaction authorisers on the client account are to include a solicitor who is a partner or a sole practitioner with a current practising certificate,
• Register of undertakings and of funds held on joint deposit are to be maintained,
• A file of documents or record in respect of electronic transfers to be maintained,
• The 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 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 the legal services provided,
• Client accounts are not to be used to hold, or to pass through, solicitors’ personal moneys,
• Responsibility for breach of the regulations extends to the solicitor responsible for the actual breach, and not just the principal or partners of the firm.

Reporting accountants

• Reporting accountant reports are to be filed within five months of the accounting date,
• Reporting accountants are to test-check postings before and after the accounting date,
• 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 an annual report,
• Closing reporting accountant’s reports are to be filed within three months of cessation, and
• Reasons are to be provided for the withdrawal of approval of a reporting accountant.

Law Society investigations

Investigations may be carried out away from the solicitor’s practice,

The Law Society may instruct an authorised person to communicate with such persons and seek such information and documentation as the Society considers necessary.

Here to help

The Law Society is available to guide and support solicitors with any regulatory compliance issues they have.

With three months to understand and prepare for the new Solicitors Accounts Regulations, the Law Society welcomes all queries at financialregulation@lawsociety.ie.