The Law Society has received enquiries from solicitors about how to deal with the benefits given to certain holders of accounts with the Halifax and Leeds building societies following their merger and subsequent conversion to public limited company status.

The questions are about who is entitled to these benefits when a solicitor holds more than one account in various capacities, either as the sole account holder or the first named holder of an account in joint names.Similar questions arose when the Abbey National became a bank.

At that time, the Law Society received advice from counsel.As with the Abbey conversion, the problem a rises because a person is entitled to only one vote on the merger and conversion proposals, and to only one set of share benefits, however many accounts he or she in fact holds, and regardless of who the beneficial owners of the funds in those accounts are.

Though the balances on those accounts will be aggregated to determine whether the account holder is entitled to vote, and whether he or she qualifies for the proposed share distribution, whatever the result, the holder will be treated as though he or she held only one account.Many solicitors hold more than one account in the larger building societies, since they are often appointed as trustees and, as professionals, tend to be the holders of the trusts' accounts.

As they will be treated as holding one account only, and thus entitled to only one vote and allocation of shares, they will be faced with the question who is to get those shares.

Counsel's general advice to solicitors was:-- where a solicitor holds one account as beneficial owner, ie a personal account, and another account or other accounts in the capacity of a trustee, the solicitor must forego any benefit for himself -- that is, all the shares must go to the account or accounts which he or she holds as trustee;-- the shares, or the proceeds of their sale, should be divided equally between all those accounts which the solicitor holds as trustee.The same principles would obviously apply where a cash bonus is paid because the account holder is not entitled to a vote and share allocation -- see para 6 on p 35 of the Halifax/Leeds merger booklet.When the Abbey was floated, existing account holders were given priority in subscribing for new shares.

Counsel was of the view that a somewhat different principle applied here: he thought that solicitors who held accounts personally were free to subscribe on their own account, as well as for trusts of which they were trustees.

If the availability of shares had been limited because of over-subscription, the shares received should have been distributed proportionately to the amounts subscribed for, between the trusts concerned and the solicitor's personal account.

Thus, a solicitor would have been entitled to receive the same proportion of shares, in relation to the amount applied for by him or her personally, as would the trusts concerned, ie each account, including the solicitor's personal account, should have suffered the same percentage reduction in the number of shares subscribed for.

There was, in counsel's view, no obligation on the solicitor to sacrifice his allocation.No merger was involved at the time of the Abbey flotation so the situation on which counsel was advising was not fully analogous to the present one.

However, it is suggested that the same principles must apply to both Halifax and Leeds accounts.When advising on the Abbey flotation, counsel did not deal specifically with the entitlement to vote.

It seems, however, that a solicitor-account holder, in relation to the Halifax/Leeds merger, must be the person to exercise the single vote but, on the basis of counsel's opinion, should do so in the interests of the account or accounts held by him in the capacity of trustee.