The Solicitors Accounts Rules

In SRA v Levy [2011] EWHC 740, the High Court said that the Solicitors Accounts Rules (SAR) exist to afford the public the maximum protection against the improper and unauthorised use of their money, and to assure them of that protection. Client money is sacrosanct and proper stewardship of client money is vital. That is why solicitors are placed under a heavy obligation to ensure the SAR are observed.

Accounts Rules: Rule 6.1

Rule 6.1 of the SAR states that ‘all principals in a firm must ensure compliance with the Solicitors Accounts Rules by the principals themselves and by everyone employed in the firm.’ That duty extends to directors and members of recognised bodies and licensed bodies and to the COFA even if the COFA is not a manager of the firm.

Rule 6.1 places all partners in a position where they are strictly liable for breaches of the SAR regardless of whether the firm has delegated responsibility for adherence to the rules to a COFA, finance partner or senior accountant. The principle of strict liability extends to junior or salaried partners even if they do not have access to all the accounting information within a firm.

Every partner facing an SRA investigation for breach of the SAR should bear that strict liability carefully in mind when answering questions relating to the breaches because a statement that someone else is to blame will not exonerate the partner or evoke much sympathy.

Breaches of the SAR

Breaches which involve offences of dishonesty will inevitably lead to a strike off of the dishonest partners.

However other serious breaches such as improper transfers from client account to office account falling short of dishonesty or a wholesale disregard of the rules could also lead to strike offs or suspensions.

Less serious breaches referred to the Solicitors Disciplinary Tribunal are likely to result in fines. Minor breaches are dealt with internally without a referral to the Tribunal if they are considered to merit a disciplinary sanction.

We regularly act for solicitors in SRA investigations and Tribunal proceedings facing allegations of breaches of the SAR, and we are able to provide solicitors in such a position with assistance at SRA interviews and advice on issues of liability and mitigation.

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