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Rule 38 – Reporting accountant’s rights and duties – letter of engagement
(1) The solicitor must ensure that the reporting accountant’s rights and duties are stated in a letter of engagement incorporating the following terms:
"In accordance with rule 38 of the Solicitors’ Accounts Rules 1998, you are instructed as follows:
(i) that you may, and are encouraged to, report directly to the Law Society without prior reference to me/this firm/this company should you, during the course of carrying out work in preparation of the accountant’s report, discover evidence of theft or fraud affecting client money, controlled trust money, or money in a client’s own account operated by a solicitor (or registered foreign lawyer, or recognised body) as signatory; or information which is likely to be of material significance in determining whether any solicitor (or registered foreign lawyer, or recognised body) is a fit and proper person to hold client money or controlled trust money, or to operate a client’s own account as signatory;
(ii) to report directly to the Law Society should your appointment be terminated following the issue of, or indication of intention to issue, a qualified accountant’s report, or following the raising of concerns prior to the preparation of an accountant’s report;
(iii) to deliver to me/this firm/this company with your report the completed checklist required by rule 46 of the Solicitors’ Accounts Rules 1998; to retain for at least three years from the date of signature a copy of the completed checklist; and to produce the copy to the Law Society on request;
(iv) to retain these terms of engagement for at least three years after the termination of the retainer and to produce them to the Law Society on request; and
(v) following any direct report made to the Law Society under (i) or (ii) above, to provide to the Law Society on request any further relevant information in your possession or in the possession of your firm.
To the extent necessary to enable you to comply with (i) to (v) above, I/we waive my/the firm’s/the company’s right of confidentiality. This waiver extends to any report made, document produced or information disclosed to the Law Society in good faith pursuant to these instructions, even though it may subsequently transpire that you were mistaken in your belief that there was cause for concern."
(2) The letter of engagement and a copy must be signed by the solicitor (or by a partner or director) and by the accountant. The solicitor must keep the copy of the signed letter of engagement for at least three years after the termination of the retainer and produce it to the Society on request.
Notes
(i) Any direct report by the accountant to the Society under rule 38(1)(i) or (ii) should be made to the Office for the Supervision of Solicitors.
(ii) Rule 38(1) envisages that the specified terms are incorporated in a letter from the solicitor to the accountant. Instead, the specified terms may be included in a letter from the accountant to the solicitor setting out the terms of the engagement. If so, the text must be adapted appropriately. The letter must be signed in duplicate by both parties – the solicitor will keep the original, and the accountant the copy.
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