Armstrong Watson works in partnership with the Law Society for the provision of accountancy services to law firms in England & Wales. We have responded to a consultation on proposed changes to the Solicitors Regulation Authority Accounts Rules (SRAAR), based on the experience of our specialist legal sector team and on behalf of our many clients. We have not commented on any rule changes not related to the SRAAR as this is not our area of expertise.
The first three proposed amendments are those that would impact the SRAAR.
Amendment 1: Firms taking money for costs in advance of work being done
We agree and welcome more clarity to this rule, it will provide additional protection to clients against firms invoicing prior to carrying out the work and further protects client funds if there were a reason preventing the firm from carrying out the work e.g. insolvency, and the client potentially not being able to recover the amount they have paid.
Amendment 2: Reimbursements for money spent on behalf of the client
We agree with easing the rules regarding transferring the cost of money spent by firms on behalf of the client, or the third party for whom the money is held. We have heard from clients that disbursement-only bills can be time consuming. We would like to note, however, that we are unclear how this would adhere to the guidance of “being clear that the client must understand how their money will be used and have confirmed their instruction”.
We suggest that if firms are to be able to pay money to their business account for money spent on behalf of clients without raising an invoice, that at the outset of a matter they should set out in a retainer document what the anticipated disbursements are, and then only proceed to make the payment to their business account without raising a bill or other written notification to the client if the amount paid is in line with the amount set out in advance.
Amendment 3: Operating a client’s own account
We are in agreement that the Rules should recognise that where solicitors have access to a client’s own personal bank account, the risk to that client’s money being misused is greater. Those clients are also more likely to be vulnerable and may be unable to self-advocate.
Rule 10 still poses some issues
Firms have difficulty gaining access to the client’s bank statements and, therefore, we still think they would struggle to undertake reconciliations even every 16 weeks. Although this does provide firms more time to request the statements, for many firms the issue is not timeliness; it is that they have no access at all.
Clients may directly initiate transactions themselves, which the firm has no involvement with at all. In these instances, we question whether the firm should really post those transactions to their accounting records against which to reconcile the balances as required.
