Retention of professional fees earned for longer than period allowable
Regulation of Practice
The Regulation of Practice committee, which monitors compliance with the Solicitors Accounts Regulations 2014 (S.I. 516 of 2014), has encountered circumstances where professional fees were retained in the client bank account by solicitors for a period longer than allowed in the Regulations. The committee wished to emphasise to the profession that any money held in the client account that is properly available to be applied in satisfaction of professional fees due to the practice must be transferred within three months. This is set out in Regulation 7 and more specifically Regulation 7(1)(a)(iii) and Regulation 7(3), as set out below:
Regulation 7(1)(a)(iii) requires that “A solicitor may withdraw from a client account in the case of clients moneys - moneys properly available to be applied by the solicitor in satisfaction (in whole or in part) of professional fees payable by the client concerned where it has been made clear to such client that clients moneys held by the solicitor for the client are being or will be applied by the solicitor in satisfaction (in whole or in part) of such professional fees; provided that such moneys shall be transferred in a timely manner from client account to office account”.
Regulation 7(3) states “In clause (1)(a)(iii) of this Regulation and in Regulations 11, 12 and 23, “in a timely manner” means within a period not exceeding three months after the date on which the solicitor concerned has furnished to the client concerned a bill of costs (or an interim bill of costs as the case may be) specifying the amount of the professional fees payable by the client and in respect of which professional fees the solicitor may properly apply clients moneys of the client concerned in satisfaction (in whole or in part) thereof”.
Regulation 5(2) also sets out that “A solicitor shall not hold moneys to which the solicitor is beneficially entitled in a client account for longer than three months”.
Regulation 5(3) clarifies that “Money to which a solicitor is beneficially entitled” means
“(a) moneys held by the solicitor for—
- (i) professional fees in respect of all or part of the amount of which the solicitor is entitled, as provided for in Regulation 7(1)(a)(iii), to transfer from client account to office account, or
- (ii) outlays in respect of which the solicitor is entitled, as provided for in Regulation 7(1)(a)(ii), to withdraw from client account;
(b) moneys held by the solicitor which, pursuant to Regulation 12, should be the subject-matter of a bill of costs furnished to the client concerned;”.