EPR 11 - Solicitor's Account Rules Overview

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Questions and Answers

What is the main focus of the lecture regarding accounts?

Conveying accounts

Office accounts

Trust accounts

Client accounts (correct)

Which of the following accounts is not defined in legislation?

Trust account

Client account

Office account (correct)

Conveying account

Which type of money can still be held in a Client Account according to the SAR?

Convincing money

Solicitor's personal funds

Unclaimed conveying money (correct)

Anticipatory convincing money

What does client’s money exclude according to the SAR?

Money belonging to firm partners Signup and view all the answers

Which of the following is defined as a current or deposit account maintained in a solicitor's name?

Client account Signup and view all the answers

What is the role of the convincing regime that came into effect in 2011?

To categorize different types of conveying money Signup and view all the answers

Which of the following statements about the solicitor's money is true?

It does not fall under the category of client's money. Signup and view all the answers

What is a key requirement when a legal practitioner encounters high-risk factors during customer due diligence?

Obtaining senior management's approval before continuing the business relationship. Signup and view all the answers

What should a legal practitioner do if customer due diligence cannot be completed without disrupting normal business operations?

Adopt internal risk management policies and proceed after risk assessment. Signup and view all the answers

What action must a law firm take if it suspects a client may be involved in money laundering or financing of terrorism?

File a suspicious transaction report and avoid establishing the new relationship. Signup and view all the answers

What consequence arises from the possibility that performance of customer due diligence may tip the client off?

The firm is not required to perform those measures but must still file a report. Signup and view all the answers

How long must a law practitioner maintain records obtained through customer due diligence measures?

Five years. Signup and view all the answers

Under Rule 16 of the Professional Conduct Rules, what must a legal practitioner do upon receiving money or securities to hold on behalf of a client?

Promptly notify the client of the receipt. Signup and view all the answers

What is a key principle guiding the interpretation of Rule 16 on client money?

A legal practitioner must protect the client's interests when handling money entrusted to them. Signup and view all the answers

Which of the following statements regarding client money is FALSE?

All received client money can be mixed with office funds if needed. Signup and view all the answers

What does Rule 5 primarily address?

The actions required when a client’s money is mixed with the solicitor's funds. Signup and view all the answers

Which of the following is NOT a duty of a solicitor regarding client money according to the Professional Conduct Rules?

Use client money to cover operational costs when necessary. Signup and view all the answers

What was a significant change in the new Legal Professional Conduct Rules 2015 compared to the old PCR?

Clearer delineation of applicable principles and rules extended to all practising lawyers. Signup and view all the answers

According to the information provided, what happens if money is deposited into a client account in violation of the established rules?

The solicitor must withdraw the money without delay upon discovery. Signup and view all the answers

Which reason best explains why stringent rules are imposed on the handling of client money?

To protect the public against unauthorized use of client’s money. Signup and view all the answers

What does the updated Professional Conduct Rules emphasize about a solicitor's contractual obligations?

They cannot contract part of their duties and processes. Signup and view all the answers

What must a solicitor do if convincing money becomes mixed with other money?

Split convincing money from any other money Signup and view all the answers

Under Rule 7.2, what is the solicitor responsible for regarding the client account?

Ensuring that client accounts are not overdrawn Signup and view all the answers

What is required for a withdrawal over $30,000?

Two-signatory rule compliance Signup and view all the answers

Which of the following is NOT allowed when transferring funds between client accounts?

Transferring without council approval Signup and view all the answers

When can a solicitor withdraw money from the client account?

For payment to the client or reimbursement of client expenses Signup and view all the answers

What is the effect of a solicitor’s lien on the funds held?

It does not affect the solicitor's recourse to the funds Signup and view all the answers

What should be noted about withdrawals under Rule 7?

Withdrawals require council approval except as provided under Rule 7 Signup and view all the answers

What does Rule 8 provide for regarding money withdrawals?

Withdrawals can be made by cheque or bank transfer under certain conditions Signup and view all the answers

Which of the following statements is true about the mixing of client's money and trust money?

Mixing of these types requires careful separation and handling Signup and view all the answers

What is required for withdrawals between $5,000 and $30,000?

The two-signatory rule must be followed unless an independent bookkeeper is present Signup and view all the answers

What authority does the Council have under Rule 12?

To require production of books of accounts Signup and view all the answers

In what situation is the two-signatory rule not applicable?

If the firm has an independent bookkeeper for sums between $5,000 and $30,000 Signup and view all the answers

What was the outcome for the solicitor in the case of Law Society of Singapore and Cheong Chin-mei Selina?

Suspension for one year with conditions on future practice Signup and view all the answers

What led to the solicitor being struck off in Law Society of Singapore and Tay Eng Kui Edwin?

The deliberate failure to maintain required books or accounts Signup and view all the answers

What was a primary charge against the partners in the Law Society of Singapore and Zulki Fi bin Muhammad Amin case?

Failure to prepare a contemporaneous reconciliation statement Signup and view all the answers

What is the main reason the salary partner was not charged with the same responsibilities as the equity partners?

He lacked ownership interest in the firm Signup and view all the answers

How was the managing partner in Zulki Fi bin Muhammad Amin's case found to have acted improperly?

By absconding with the firm's operational funds Signup and view all the answers

What key requirement is laid out in Rule 11 for solicitors?

To maintain accurate and complete financial records Signup and view all the answers

What does the Court require from partners regarding the management of client accounts?

Adequate supervision of the firm's client account Signup and view all the answers

Which of the following events is a common consequence of failing to adhere to Rule 11?

Professional penalties such as suspensions or being struck off Signup and view all the answers

Study Notes

Professional Fees and Solicitor's Account Rules (SAR)

Kenneth Perera, Managing Director of Allgate Chambers, will cover professional fees and solicitor's account rules (SAR)
Five topics will be covered: client's money, money laundering, financing of terrorism prevention. The last three topics will be covered in the next lecture.
Four account categories exist: client account, conveying account, office account, and trust account.
Only three account types are defined in legislation: client account, conveying account, and trust account
Office account is not defined but related to SAR, referring to the law firm's account for holding office money.
The lecture focuses on client's money held in client accounts, governed by SAR.
Six categories of money exist, including convincing money, anticipatory convincing money, and unclaimed convincing money.
Convincing money and anticipatory convincing money are defined by the Convincing and Law of Property Act (2011)
Unclaimed conveying money is defined in Rule 7 of the SAR; is the only type of conveying money that can be held in a client account.
A client account is a current or deposit account maintained by a solicitor at a bank or approved finance company, including the word "client" in the account title.
Client money is defined to explicitly exclude solicitor or firm's own money, or money held by trustees (solicitor as trustee).
Solicitors have ethical obligations beyond SAR, as covered in the Legal Professional Conduct Rules (PCR) of 2015.
Solicitors must safeguard client money by following procedures and processes set by law.
Client money must be paid without delay, even if deposited incorrectly.

Client's Money Rules

Client money is money held by a solicitor on behalf of a client, in various capacities (including solicitor).
Excludes solicitor/firm funds or trust funds where solicitor is the trustee.
Other money types (convincing, anti-convincing) regulated separately.
Money must be paid into a client account/without delay (Rule 3).
Withdrawal from the account must adhere to specific rules.
Solicitors must avoid mixing client money with other funds (Rule 5).
Solicitors cannot contract out of their duties or processes related to handling client's money (Rule 3) and have to use processes carefully calibrated to avoid conflicts (Rule 5). Mixing funds or failing to adhere to other rules is a breach of this rule.
Client money must be held in a way that safeguards client interests (Rule 16).

Money Withdrawals

Withdrawals are allowed under certain circumstances, but an overdrawn client account is prohibited (Rule 7)
Methods for withdrawing money, including cheque or transfer, are specified, often with limits or conditions (Rule 8)
Two-signatory rule applies to certain withdrawal amounts.

Maintaining Accounting Records

Solicitors must maintain detailed accounting records (Rule 11).
These records must be preserved for a minimum of 6 years.
The Council has the power to require production of these books (Rule 12).
The two-signatory rule does not apply for sums between 5,000and5,000 and 5,000and30,000 if an independent bookkeeper is used.

Prevention of Money Laundering and Financing of Terrorism

Legal practitioners/firms must perform customer due diligence, verifying client identity and funds source.
Enhanced measures are required for high-risk clients.
Customer due diligence cannot be delayed if it disrupts business operations.
The law firm must not establish a business relationship if the client is suspected of money laundering or terrorism financing.

Fees and Costs

Client's costs must be paid appropriately and should be explained in a language the client understands
Solicitors are not allowed to charge unreasonable fees, which can arise from misunderstandings about what fees are for, including misapplications of the two-third rule, or the lack of properly documented agreements to clarify the nature of payment agreements when clients are charged.
Client disputes or queries on bills require disclosure to inform them of their rights to have the bill taxed or reviewed

Other Important Rules

Contingency fees are prohibited
Solicitors cannot hold or receive mixed sums of money (convincing/other funds)
All fees must comply with all relevant Acts and regulations in place to protect clients from being exploited or overcharged, or to safeguard the client from actions that could be reasonably seen as breaches of trust.

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Description

This quiz explores professional fees and solicitor's account rules (SAR) as discussed by Kenneth Perera. Topics include various account categories such as client accounts and money laundering prevention measures, focusing on the management of client's money. Understanding these concepts is crucial for proper legal financial practices.