Regulatory and Compliance Training & Consultancy

Residual Client Ledger Balance Clearance Service

June 2016

There are very few firms of solicitors that do not have a problem, to a greater or lesser extent, with old residual balances on their clients' ledger. Often, these balances may only be a few pounds or even a matter of pennies but, even so, they can create very real compliance problems under the SRA Accounts Rules 2011.

Residual client ledger balances cause particular issues for the Compliance Officer for Finance and Administration (COFA) within a firm. Under rule 14.3 of the SRA Accounts Rules 2011, all firms are under an obligation to account promptly to their clients for any balance remaining on the client ledger account, regardless of the amount involved. The existence of even a relatively small number of residual client ledger balances is likely to represent a repeated breach and/or systematic failure and will, therefore, constitute a material breach of the SRA Accounts Rules 2011 that should be reported to the Solicitors Regulation Authority (SRA) by the COFA.

In a recent guidance document, the SRA suggest that in a well-run firm, any monies held on a client ledger at the completion of the matter will be returned to the client. Thus, the presence of residual client balances at any one time will be rare. In a firm with adequate procedures, residual client balances are returned to clients within ninety days. In our experience, a significant number of solicitors‘ firms do not come vaguely close to meeting the SRA’s exacting standards and often have a large number of residual balances which may have been in existence for many months or, quite frequently, years.

The good news is that help is at hand and it may not even cost you anything.

Our Residual Client Ledger Balance Clearance Service

Despite the best of intentions, many firms struggle to find the time to address their residual client ledger balances. It can be a time consuming and laborious process which is difficult to address in the hustle and bustle of a busy office.

We have successfully helped a number of firms to clear their residual client ledger balances in an efficient and cost effective manner through our Residual Client Ledger Balance Clearance Service.

The service we offer is bespoke and the scope of our work and the approach we take is agreed with each prospective client in advance. Because we understand that certainty of costs is important for a firm of solicitors, we agree a fixed fee in advance of undertaking any work for our clients.

Normally, we deal with all administrative aspects of the process from identifying and tracing clients, and, where necessary, reviewing client matter files, preparing covering letters to be sent out to clients or third parties. On your behalf, at the end of the process, we will also make a waiver application to the Solicitors Regulation Authority under rule 20.1 (k) of the SRA Accounts Rules 2011 for any balances in excess of £500 that we have not been able to identify, trace and distribute. If you wish us to do so, at this stage, we can request that our fees are deducted from the balance to be paid to charity. This is entirely at the discretion of the SRA and we make no guarantees in this regard.

Want to Do It Yourself?

We have published a guidance document entitled, ‘Dealing with Residual Client Balances under the SRA Accounts Rules 2011’ which has proven to be very popular and provides advice on how to tackle your residual client ledger balances.

To find out more about our residual balance clearance service please contact Richard Lane on 0330 223 5346 for a confidential discussion.

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