This has long been a guiding principle. Solicitors are guardians and trustees of client money and are expected to exercise proper stewardship over it. Everything that we do with client money has to in accordance with the SRA Accounts Rules and “ethical”.
This case is another reminder of how the SDT views serial breaches, and how what was called a “tidying up exercise” brought a career to an end.
There really is no such thing as a tidying up process by which a solicitor can take residual balances from client account. I have seen this expression used many times and its invariably misplaced. The simple position is that there is either a proper entitlement to transfer the money to office account, or there is not.
I have come across this scenario many times, more so since solicitors must actually check what balances they hold and why. A busy practice may well have many such balances after transactions have been concluded and they need dealing with properly.
In a Judgment dated 7 August 2017 the Tribunal reiterated the importance of properly identifying an entitlement to money before transferring it from client to office account in respect of fees. This was a case in which a solicitor, Mr Burke, identified a number of relatively modest residual balances on client ledgers. They added up. He drew bills matching each of those balances and then transferred the money across to office account. There was no evidence according to the judgment that clients had been notified or had been sent any of the bills. Further, there was no evidence that Mr Burke had taken any steps to check work had been done to justify fees, or to identify who may be properly entitled to the money. These cumulative failings, combined with the number of transfers were sufficient to enable the tribunal to conclude he had behaved deliberately and thereby dishonestly.
Whilst recognising that Mr Burke had learned a severe lesson from the process and was unlikely to repeat his behaviour, the Tribunal concluded that there was damage to the solicitors’ profession and that a message needed to be sent to remind the profession this was not acceptable. This very substantially contributed towards the decision to strike him from the Roll.
If in any doubt at all about what you can and cannot do with money in client account, take informed advice.