Transfer of funds PDF

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Transfer of funds between client account and office account...

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Transfers  if money withdrawn from client account and paid into the office bank account - cash transfer.  If firm holds money in the client bank account for one client and stops holding the money to the order of the first client and starts holding it to the order of a second client - inter-client transfer. CASH TRANSFERS  Why might such a transfer occur?  Reimbursement of an expense incurred  not necessary for the firm to issue a bill of costs before making the transfer.  Money is ‘spent’ for this purpose when the firm incurs liability for the expense.  It is client money until the firm decides to make reimbursement, so there is no requirement to make the transfer within 14 days of incurring liability for the expense.  Payment of firm’s professional fees  can transfer money for professional fees, including any VAT element, provided a bill has been issued (or a fee agreed in accordance with Rule 17.5).  Other  circumstances set out in Rule 14, which include:  (a) to open or maintain the client bank account;  (b) to advance money to a client or trust where the solicitor needs to make a payment on behalf of the client or trust and insufficient client money is available (once advanced, the money becomes client money);  (c) to replace money withdrawn in breach of Rule 20;  (d) to allow the client a sum in lieu of interest.  Recording the transfer from client to office bank account  This is done in two parts, as follows:  (1) Record the withdrawal of money from the client bank account:  Client section  CR cash account  DR clients ledger account  (2) Record the receipt of money into the office bank account:  Office section  DR cash account  CR clients ledger account INTER-CLIENT TRANSFERS/PAPER TRANSFER  firm holding money in client bank account for Client A can stop holding that money for Client A and starts holding it for Client B.  An example would be where A owes B money and asks the firm to hold the money for B.  No money is taken out of the client bank account.  Rule 1.2(f ) - firm’s accounts must show accurately the position of money held for each client.  Requirements  Rule 27 - solicitor can make the paper entries only if the money could have been:  (a) withdrawn from the client bank account on instructions of first client, Rule 20.1; and

 (b) paid into the client bank account on the instructions of the second client, Rule 14.  private loan - any loan other than one provided by an institution which provides loans on standard terms in the normal course of its activities.  If transfer is a private loan, the firm must have the prior written authority of both clients.  not necessary if transfer is for other purposes, for example, a gift or in discharge of a debt.  Recording the transfer  The transfer must be shown in the client ledger accounts of both clients:  DR Client ledger account of first client  CR Client ledger account of second client  Rule 29(2) requires the firm to keep a separate record of all inter-client transfers - ‘transfer journal’ or a ‘transfer sheet’....