Are the SRA accounts rules just for the accounts department in a law firm to know? Find out LexisNexis
The simple answer is no.
The SRA Accounts Rules are not just for the accounts department in a law firm to know because the rules apply to all firms regulated by the SRA, including all those who manage or work within these firms.
Who in a law firm needs to know the Accounts Rules? Solicitors, registered European lawyers, registered foreign lawyers, and other staff who handle or deal with client money or accounts must be familiar with the rules and comply with them.
Small law firms have staff that wear many different hats, and if a legal secretary sometimes looks after the books and billing, then they should have Accounts Rules training too.
The rules are designed to protect client money and ensure that the money is kept separate from the firm’s own money.
Regulated firms who work on reserved areas of law will have two accounts in place, which are the office/business account and the client account.
The rules also require firms to have systems and controls in place to ensure compliance and to keep accurate accounting records.
What are the consequences of not following the SRA Accounts Rules?
The legal press is full of the Solicitors Regulation Authority (SRA) taking disciplinary action against individuals or firms who breach the rules, however minor. Law firms who have breached the rules often end up being fined by the SRA, or have an intervention, but the reputation of the firm is often damaged as social media and online press is prevalent.
It is important, therefore, for everyone in a law firm to know and follow the SRA Accounts Rules to ensure that firmwide compliance is on point, the firms’ reputation is protected, but most importantly that clients’ money is out of harm’s way.
Consequences of not adhering to the SRA Accounts Rules can impact both the firm and any individual involved. It looks like this:
- Fines
- Sanctions
- Interventions
- Solicitors Disciplinary Tribunal (SDT)
- Possible civil claims from clients or third parties who have suffered loss, or harm as a result of the breach.
- Reputation damage
Classic SRA Accounts Rules’ Breaches
The following are the most seen breach of the rules and worth reading up on rules 2.5, 3.3, 4.3, 5, 6 and 8 specifically.
- Residual balances
- Billing / payment of costs
- Duty to correct breaches upon discovery
- Withdrawal of client money
- Suspense ledgers
- Banking facilities
There are plenty of training providers offering SRA Accounts Rules training and the Institute of Legal Finance & Management (ILFM), as the professional body supporting law firm finance, COFAs and practice managers, is the obvious place to get up to date, online and live training for Accounts Rules.
