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The Law Society has been asked by solicitors for guidance in relation to compliance with Regulation 13(8)(e) of the Solicitors Accounts Regulations 2023 (S.I. 118 of 2023) and, in particular, how to deal with two specific situations involving moneys remaining in the client account.

Regulation 13(8)(e) provides as follows:

“A solicitor shall review the listing of client ledger balances and controlled trust balances for undue or unnecessary delays in dealing with client matters, in particular in discharging undisbursed outlays, moneys due to clients or moneys due to be paid for or on behalf of clients, and where the listing discloses unnecessary or undue delays in dealing with client matters, take immediate action to deal with those matters, where appropriate, with same to be approved, in writing, by the compliance partner.”

The first situation arises where a solicitor, having taken all reasonable steps to contact the client, is unable to distribute the moneys because the beneficial owner of the moneys is untraceable. The Law Society is advised that the Solicitors Acts do not provide for the treatment of these moneys. The withdrawal of these moneys from the client account other than in accordance with the provisions of the Solicitors Accounts Regulations 2023, effectively (though perhaps reversibly) altering the ownership of the moneys, is not currently provided for in legislation. Accordingly, the approach suggested by the Law Society is that having taken all reasonable steps to contact the client, these moneys remain in the client account. It is not permissible under existing legislation to pay these moneys to a charity or a benevolent fund. The Law Society is currently drafting a legislative proposal to deal with the issue of untraced client moneys.

The second situation is where moneys have been left in the client account rather than being cleared out at the conclusion of a particular client transaction. With the passage of time, the reason for those moneys remaining in the client account can be forgotten and the moneys remain in the client account. If there are moneys remaining in the client account following completion of the client matter, and following the payment of outlay and professional fees due to the solicitor, the moneys should be returned to the client. Even if the moneys have been held for some time and cannot be explained, they are client moneys which should be withdrawn in favour of the client. If the beneficial owner of the moneys is untraceable then the moneys remain in the client account, as set out above.

It is envisaged that as a result of compliance with the provisions of Solicitors Accounts Regulations 2023, in particular Regulation 13 (8)(e), Regulation 13(8) (f), Regulation 12(2) and Regulation 5(5), as summarised below, fewer cases of moneys remaining in the client account should arise.

• Regulation 13(8)(e) requires a solicitor to review client ledger balances for undue or unnecessary delay in dealing with client matters.
• Regulation 13(8)(f) requires a solicitor to list client ledger balances outstanding two years or more to be included in Appendix 6 of the Reporting Accounting Report.
• Regulation 12(2) requires a solicitor to furnish to the client at the completion of a legal service a statement disclosing all moneys received, paid, or held in respect of each client matter.
• Regulation 5(5) requires a solicitor to return to a client any client moneys held in a client account as soon as practicable following completion of the provision of legal services for that client.

Niall Connors

Registrar of Solicitors and Director of Regulation