Rule 2 – Interpretation
(1) The rules are to be interpreted in the light of the notes.
(2) In the rules, unless the context otherwise requires:
(a) "accounting period" has the meaning given in rule 36;
(b) "agreed fee" has the meaning given in rule 19(5);
(c) "bank" means an institution authorised under the Banking Act 1987 (which includes a European authorised institution), the Post Office in the exercise of its powers to provide banking services, or the Bank of England;
(d) "building society" means a building society within the meaning of the Building Societies Act 1986;
(e) "client" means the person for whom a solicitor acts;
(f) "client account" has the meaning given in rule 14(2);
(g) "client money" has the meaning given in rule 13;
(h) a "controlled trust" arises when:
(i) a solicitor is the sole trustee of a trust, or co-trustee only with one or more of his or her partners or employees;
(ii) a solicitor who is a director or employee of a recognised body is the sole trustee of a trust, or co-trustee only with one or more of the recognised body’s other officers or employees or with the recognised body itself;
(iii) a registered foreign lawyer who is a partner in a multi-national partnership is, by virtue of being a partner in that partnership, the sole trustee of a trust, or co-trustee only with one or more of the other partners or employees of that partnership;
(iv) a registered foreign lawyer who is the director of a recognised body is, by virtue of practising as a director of the recognised body, the sole trustee of a trust, or co-trustee only with one or more of the recognised body’s other officers or employees or with the recognised body itself; or
(v) a recognised body is the sole trustee of a trust, or co-trustee only with one or more of the recognised body’s officers, employees or partners; and "controlled trustee" means a trustee of a controlled trust; (see also paragraph (y) below on the meaning of "trustee" and "trust");
(i) "controlled trust money" has the meaning given in rule 13;
(j) "costs" means a solicitor’s fees and disbursements;
(k) "disbursement" means any sum spent or to be spent by a solicitor on behalf of the client or controlled trust (including any VAT element);
(l) "fees" of a solicitor means the solicitor’s own charges or profit costs (including any VAT element);
(m) "general client account" has the meaning given in rule 14(5)(b);
(n) "mixed payment" has the meaning given in rule 20(1);
(o) "multi-national partnership" means a partnership comprising one or more solicitors and one or more registered foreign lawyers;
(p) "office account" means an account of the solicitor or the practice for holding office money, or other means of holding office money (for example, the office cash box);
(q) "office money" has the meaning given in rule 13;
(r) "principal" means:
(i) a sole practitioner;
(ii) a partner or a person held out as a partner (including a "salaried" or "associate" partner);
(iii) the principal solicitor (or any one of the principal solicitors) in an in-house practice (for example, in a law centre or in commerce and industry);
(s) "professional disbursement" means the fees of counsel or other lawyer, or of a professional or other agent or expert instructed by the solicitor;
(t) "recognised body" means a company recognised by the Society under section 9 of the Administration of Justice Act 1985;
(u) "registered foreign lawyer" means a person registered by the Society under
(v) "separate designated client account" has the meaning given in rule 14(5)(a);
(w) "Society" means the Law Society of England and Wales;
(x) "solicitor" means a solicitor of the Supreme Court of England and Wales; and for the purposes of these rules also includes: a solicitors’ partnership; a registered foreign lawyer practising as a member of a multi-national partnership or as the director of a recognised body; a multi-national partnership; a recognised body; a partnership of recognised bodies; and a partnership of solicitors and recognised bodies;
(y) "trustee" includes a personal representative (i.e. an executor or an administrator), and "trust" includes the duties of a personal representative; and
(z) "without delay" means, in normal circumstances, either on the day of receipt or on the next working day.
Notes
(i) Although many of the rules are expressed as applying to an individual solicitor, the effect of the definition of "solicitor" in rule 2(2)(x) is that the rules apply equally to all those who carry on a practice and to the practice itself. See also rule 4(1)(a) (persons governed by the rules) and rule 5 (persons exempt from the rules).
(ii) A client account must be at a bank or building society’s branch in England and Wales – see rule 14(4).
(iii) For the full definition of a "European authorised institution" (rule 2(2)(c)), see the Banking Coordination (Second Council Directive) Regulations 1992 (S.I. 1992 no. 3218).
(iv) The definition of a controlled trust (rule 2(2)(h)), which derives from statute, gives rise to some anomalies. For example, a partner, assistant solicitor or consultant acting as sole trustee will be a controlled trustee. Two or more partners acting as trustees will be controlled trustees, but two or more assistant solicitors or consultants acting as trustees fall outside the definition. In the latter case, if the matter is dealt with through the firm, the partners will hold any money as client money.
(v) The fees of interpreters, translators, process servers, surveyors, estate agents, etc., instructed by the solicitor are professional disbursements (see rule 2(2)(s)). Travel agents’ charges are not professional disbursements.
(vi) The general definition of "office account" is wide (see rule 2(2)(p)). However, rule 19(1)(b) (receipt and transfer of costs) and rule 21(1)(b) (payments from the Legal Aid Board) specify that certain money is to be placed in an office account at a bank or building society.
(vii) An index is attached to the rules but it does not form part of the rules. For the status of the flowchart (Appendix 1) and the chart dealing with special situations (Appendix 2), see note
(xiii) to rule 13.
section 89 of the Courts and Legal Services Act 1990;
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