Solicitors are required to prepare balancing statements in respect of transactions on the client account every three months instead of every six months. The balancing statement balances what is in the client account against what should be in the client account. This shorter period between each statement means deficits will be more easily detected. Ideally, your bookkeeper should be doing bank reconciliations monthly which will pick-up anomalies and ensure that bi-annual balancing statements are relatively simple to produce.

• Solicitors will be required to review the listing of client ledger balances for undue and unnecessary delay in dealing with matters, in particular, in discharging undisbursed outlay, moneys due to clients and monies due to be paid out for or on behalf of clients.
• Solicitors will be required to list client ledger balances outstanding for two years at appendix six to the accountant’s report or more, disclosing the reason the balance is outstanding and, where appropriate, any action taken, or proposed, to clear the balances.
• The inclusion of the list of balances outstanding two years or more in the reporting accountant’s report will provide evidence to the Law Society that client ledger balances have been reviewed for undue or unnecessary delays.
• If the client won't cash the cheque consider sending a bank draft, advising the client that they are prohibited by the Law Society from holding the money.

• An authorised signatory must be a solicitor who is a partner or the sole practitioner in the firm with a practising certificate in force. Where there are co-signatories, at least one of the co-signatories is to be a solicitor with a practising certificate in force. In exceptional circumstances, a person other than a solicitor with a practising certificate in force may act as an authorised signatory, but only with the prior approval of the Law Society.

• If a solicitor cannot rectify a deficit of client funds within seven days of it coming to the attention of the solicitor, the solicitor will be required to notify the Law Society in writing, as soon as practicable unless the deficit arises as a result of bank error or the charging of negative interest refunded to the client account.
• It is the experience of the Law Society that the earlier that deficits are notified to the Law Society, the more likely the deficit can be rectified quickly, with better outcomes for clients.

• Regulation 35(1) makes clear that solicitors shall not borrow from a client unless the client has been independently legally advised. Client accounts are not to be used by solicitors for the purpose of loans to a solicitor from a client, or for the purpose of loans by a solicitor to a client or for the purpose of loans between clients of a solicitor.

• Where a solicitor withdraws money from the client account by cheque or by electronic transfer for the purposes of making a payment in cash to a client or a third party in excess of €100, the solicitor will be required to obtain documentary evidence of payment of such moneys. Such evidence to include the witnessed signature of the recipient of the moneys.

• It is a regulatory breach for a solicitor to withdraw moneys from the client account towards payment of outlay due to the solicitor or in satisfaction of professional fees, without relating such withdrawal to a specific client.

• Bills of costs are to be furnished in accordance with the provisions of the Legal Services Regulation Act 2015. Solicitors must maintain on file documentary evidence of compliance with Section 68 of Solicitors (Amendment) Act 1994 and Section 149 to 153 (inclusive) of the Legal Services Regulation Act 2015.

• The definition of client moneys shall not include moneys received or held by a solicitor other than, in respect of legal services provided by a solicitor, or to be provided, arising from the solicitors practice as a solicitor. If no legal service is being provided, the funds should not be paid into or continue to be held in the client account. It shall be a breach of the regulations to pass funds through client account where no legal service is being provided.

• The definition of client moneys shall not include moneys received by a solicitor while conducting a personal, legal or financial matter. However, a solicitor may pay into the client account such moneys as are the proceeds of a loan to the solicitor from a financial institution specifically for a personal legal transaction for the purchase of a property by a solicitor who is engaged in the transaction, provided the funds are discharged from the client account in accordance with the terms of the loan or within 14 days of receipt. It shall be a breach of the regulations for a solicitor to hold any personal moneys in the client account.

• Records of electronic transfers on the client account are to be retained on the client file and on a separate file dedicated to such transactions. A solicitor will be required to ensure that back-ups of computerised information are performed on a timely basis and stored securely other than on the practice office premises. Accounting records for a least the current financial year and the previous financial year must be retained. In addition, solicitors are required to maintain a register of money held on joint deposit, and a register of undertakings.

• Where the Reporting Accountant forms an opinion (or has reasonable grounds to suspect) that there is a deficit of client funds which cannot be rectified within seven days, or that there are entries in the books of account which have been made to conceal the existence of a deficit, the reporting accountant may directly notify the Registrar of Solicitors. The reporting accountant will not be required to disclose any information that may amount to a breach of any enactment or rule of law.

• The regulations apply to all solicitors who handle client moneys.
• Cheque signatory / authoriser must include a solicitor with a practicing certificate being the sole practitioner or a partner of the firm
• Responsibility for any breach of the regulations extends to the solicitor responsible for the actual breach, and not just the principal or partners of the firm.
• The firm compliance partner is to provide specific confirmation to the Law Society, through the Form of Acknowledgement, of compliance with the regulations in respect of balancing statements, balances outstanding two years or more, review of client ledger balances for undue or unnecessary delays and back up of computerised accounting systems.

• Client balancing statements must be prepared at quarterly intervals in respect of client account transactions and signed off on by the sole practitioner / compliance partner.
• Client ledger balances must be reviewed for undue or unnecessary delays in discharging client moneys and immediate action taken to clear same, where appropriate.
• A listing of client ledger balances outstanding two years or more is to be prepared at the accounting date and furnished to the Law Society by the Reporting Accountant (RA) at year end.
• A register of undertakings must be maintained.
• A register of funds held on joint deposit must be maintained.
• A record of electronic transfers must be maintained separately.
• Off-site back-ups of accounting records on computerised systems must be maintained.
• The Law Society must be notified of a deficit that cannot be rectified within seven days of the deficit coming to the solicitor’s attention.

• Prior to withdrawing costs from the client account, a solicitor is required to notify the client in writing in accordance with Regulation 7(1)(a)(iii). The client must be notified in writing of moneys applied in satisfaction of costs.
• Clients are to be furnished with a statement of account in respect of each matter.
• Client moneys are to be returned to clients when the legal service is completed.
• Witnessed signatures to be obtained from recipients of any cash payments.
• Only funds received in respect of the provision of legal services to clients can be lodged to the client account.
• Documentary evidence of compliance with S149 to 153 of LSRA must be kept on file.

• Client accounts are not to be used for the purpose of borrowing from, lending to, or organising loans between clients.
• Client accounts are not to be used to hold moneys other than in respect of legal services provided, or to be provided.
• Client accounts are not to be used to hold, or to pass through, solicitors’ personal moneys.
• Transfers of fess and outlays from client to office accounts are to be related to specific clients.

• It is no longer a requirement to open a separate bank account where a solicitor is acting as personal representative of an estate.
• Estate moneys to be lodged to the client account.

• The Solicitors Accounts (Amendment) Regulations 2021 (SI 463 of 2021), which dealt with interest charges, have been fully incorporated into Regulation 8. Regulation 8 now deals with both interest charges and interest earned on clients moneys

Under Regulation 39(1)(b), the Law Society may agree to a request for or require the investigation to take place at a place or places other than the place or places of business of a solicitor, if the Law Society is satisfied that there are reasonable grounds for such a request or requirement.

• Under Regulation 39(6), a solicitor or the partner, employee or agent of the solicitor, shall not delay, obstruct, impede, interfere with or resist an authorised person or persons in the exercise of their functions under these Regulations, or utter or send threats to, or in any way, intimidate or menace an authorised person or persons or cause the publication of the name and or address of an authorised person or persons

• Under Regulation 39(8)(a), where, arising from an investigation by an authorised person…it is considered by the Law Society that a report prepared by the authorised person discloses evidence of a material breach of these Regulations…the Law Society may conduct such further investigations or make such further enquiries as the Law Society deems necessary.

• Under Regulation 39(8)(f), if the Law Society decides to make an application to the Legal Practitioners Disciplinary Tribunal following an identified breach of these Regulations, or such other misconduct by the solicitor, as disclosed by their accounting records (or both), the Law Society may require the solicitor to pay the costs of the investigation. Under Regulation 39(8)(g), when a solicitor, during the course of an investigation, does not provide a written response as required by regulation 9 of the Regulation of Practice Committee Regulations, and where that documentation is subsequently not filed within the time limit (as specified by the Law Society), the solicitor may inter alia be required to pay a contribution towards the Law Society’s costs, as deemed appropriate.

• Under Regulation 40, when requested by the Law Society by notice in writing, a solicitor (or other) shall provide the Law Society within such time as requested (not being less than seven days) an accounting statement relating to the six month period prior to the notice, showing, in summary form:

(a) a list of all client and office ledger balances, together with appropriate reconciliations up to a specified date, in respect of all clients, controlled trusts, non-controlled trusts and insolvency arrangements, or, where so specified by the Law Society in such notice, details of all transactions conducted through client and office accounts, in respect of a specified client or clients or a specified controlled trust or controlled trusts or a specified non-controlled trust or non-controlled trusts or a specified insolvency arrangement or insolvency arrangements, and

(b) the balance on each client, office, controlled trust, non-controlled trust and insolvency arrangement account, as appearing on a specified date on statements from the bank at which such accounts are maintained, as adjusted for outstanding withdrawals and lodgements;

(c) the balancing statement prepared by the firm on a specified date in accordance with Regulation 13(8)(a);

(d) such further or other information from the accounting records of the firm that the Law Society may specify.

• In addition to or in lieu of an accounting statement, the Law Society may also request a report by the solicitor’s reporting accountant stating:

(a) whether, in the opinion of the reporting accountant, the accounting records of the solicitor…have been properly maintained and kept in accordance with these Regulations and whether the accounting records duly record the financial position of the solicitor towards each client concerned.

(b) where the reporting accountant cannot provide such opinion as provided for in Regulation 40(3)(a) the reporting accountant is prevented from providing such opinion.

• A report from a reporting accountant may, where the Law Society directs, be limited only to one or more specified clients or controlled trusts or non-controlled trusts or insolvency arrangements.