Key Tips for Rule 19
There is a new regime for dealing with monies received from a client in response to the Solicitor sending out a bill or other notification of costs. Upon receipt of the monies the Solicitor must make a choice as to how the monies are to be dealt with, i.e. into which account the money is to be banked.
Initially the Solicitor must determine the composition of the payment without delay.
Funds made up of office money only
If the sum of money received comprises only of office money then it must be placed in an office account.
Funds made up of client money only
If the sum comprises only of client money then the entire sum must be placed in a client account.
Funds made up of office and client money
If the sum includes both office money and client money the Solicitor has three further options.
1. If the sum includes both office money and client money (other then unpaid professional disbursements) the solicitor must deal with it under Rule 20 (which is a separate Rule which deals with the receipt of mixed payments)
2. If the payment comprises of only office money and client money in the form of unpaid professional disbursements then the Solicitor may place the entire sum in an office account, provided that by the end of the second working day following receipt, any unpaid professional disbursements are paid or transfer an amount for their payment into client account.
3. The third option is to pay the entire sum into a client account regardless of its composition and transfer any office money out of the client account within 14 days of receipt.
The basis of Rule 19 is that it allows the Solicitor to place all payments into the correct account at the first instance. It allows the prompt banking into an office account of a payment received from a client when the only question is whether or not the payment includes some client money in the form of unpaid professional disbursements.
Electronic transfer of funds, particularly in the field of commercial law, is becoming increasingly common. The problem may occur, therefore, if a Solicitor has a policy of paying all monies into office account and paying professional disbursements within two days. In order to use this option a Solicitor needs to establish a system with the client whereby the client is given an office account number for payment of costs. However the system must be capable of ensuring that, when invoices are sent to the client, no request is made for any client money with the sole exception of that which is required for unpaid professional disbursements. The final crucial point in using such a system is that a mechanism must be in place for the client to inform the solicitor that payment has been made, in order to ensure that the unpaid professional disbursements are dealt with within the two-day Rule.
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