Taking care of other people's money, particularly when that money has to produce vital income, is a considerable responsibility.

Many law firms have traditionally passed this activity across to their colleagues in the investment industry.

Now, however, legal practices are retaining much more of the investment advisory work which their clients would not formerly have placed with them.

Providing a law firm has recruited specialist investment managers, which all members of the Association of Solicitor Investment Managers (ASIM) have done, there are strong arguments for clients to seek that advice from a suitably specialised legal practice.

For one thing, law firm partners are jointly responsible for any debts to clients of their practice and are usually insured for very much higher sums than, for instance, an independent financial adviser.As an investment adviser within a leading commercial law practice with hundreds of clients, it is important to be able to provide up to the minute investment advice regularly to clients in a format which can be quickly understood.

A question which frequently arises amongst investors and would-be investors is: what are the relative merits of unit trusts and investment trusts?At the end of 1984 total funds managed by investment trusts in Britain were £15 billion.

By December 1994, this figure had risen to £45.1 billion.

The figures for unit trust investment are even more dramatic for the same period, rising from around £15 billion to no less than £92 billion today.Perhaps one of the most persuasive messages - besides a consistently good performance record - which a unit trust manager or investment trust manager can sell to investors is the spread of risk they offer.

It makes a great deal more sense to put your money into a vehicle which invests in a range of stocks and shares and other fixed interest investments rather than in one or two individual stocks.If one of the companies in such a fund turns in a poor performance, it does not, of course, mean that the investment as a whole will turn sour.

There is a cushion of other companies within the portfolio which will offset such a performance.

Putting all your money in one or two individual stocks can be a recipe for disaster, particularly if you are looking for steady and reliable growth.However, before an investor decides on which of the two, there are a number of differences which should be considered.

The first is structure.

A unit trust is a legal trust fund which issues units representing the value of the underlying holdings in the portfolio.

The number of units will increase or reduce depending on whether investors are net sellers or buyers.

This is why a unit trust is often described as an open-ended fund.

An investment trust is a publicly listed limited company with shares which are traded on the Stock Exchange.

Share capital is fixed so it is also referred to as a close-ended fund.

Unit trust unit holders have a share in the collective rights of the assets of the fund and access to independent trustees who act on behalf of the investors.

In an investment trust, shareholders do not have ownership rights over the company's assets which are registered in the name of the trust.

A unit trust fund is governed by rules laid down by the Securities and Investments Board and other regulatory organisations whereas an investment trust investor has access to an independent board of directors and the protection of company law and Stock Exchange regulations.Cost is also an important factor in differentiat ing between the two types of fund.

With a unit trust, there is usually an upfront charge of around 5.25%, with annual management fees generally varying between 1% and 1.5%.

It is important to note however that more and more unit trust groups are reducing their initial charges on unit trusts held through a PEP.

With an investment trust there are no management fees on the purchase of shares but the normal Stock Exchange commission and expenses apply on buying and selling.

These costs work out at about 2% per transaction.

Annual management and promotional charges average out at about 0.5% of the trust's assets.Thirdly, with a unit trust, offer and bid prices are calculated using a formula laid down by the Securities and Investments Board and are directly related to the value of shares or other investments held by the unit trust.

The offer price is the price at which investors may buy units and the bid price at which investors may sell their units back to the manager.

The most effective performance monitoring tables are those using the offer to bid method which takes account of the charges.In the case of an investment trust, share prices fluctuate with supply and demand for the shares on the Stock Exchange.

The price usually stands at a discount to the net asset value of the shares in the portfolio, but may occasionally rise to a premium where the price of the shares is greater than the underlying assets.

These net asset values are listed daily in the press.

Many of the performance figures are on a mid-market basis, but this does not take account of the inevitable dealing costs involved.A unit trust must generally have at least 90% of its portfolio in shares or bonds traded on the world's leading, and more importantly, British-recognised, stock markets.

Only 10% can be invested in unquoted shares or unrecognised markets.

In the case of an investment trust, as a publicly listed company, there are almost no restrictions on what shares or securities the portfolio holds.

This includes unquoted shares and shares traded on emerging markets which are not officially recognised by the relevant British authorities.There are always degrees of risk in any form of investment, but safeguards are in place, both with unit trusts and investment trusts which make these risks sustainable.

Unit trusts are not permitted to borrow.

Even the use of futures and options to iron out peaks and troughs of stock market or currency volatility are subject to strict guidelines laid down for the vast majority of unit trusts.

Investment trusts, however, are permitted to borrow additional funds to purchase investments.

This in turn provides the potential benefits of 'gearing' (or borrowing).

In a rising stock market, a geared portfolio could outperform a more conventional ungeared unit trust.

In a falling market, however, the value of the underlying portfolio will drop more sharply, thus presenting a risk.Solicitors often deal with unsophisticated investors - although of course this is not always the case.

For a smaller portfolio incorporating, say, a savings scheme of £25 a month, a unit trust would be the safest route.

With a larger portfolio, it might be more sensible to go for an investment trust.As far as private investors are concerned it is difficult to choose between them.

For investments of under £1000 the unit trust is probably more suitable, since the spread between bid and offer price is much less than the dealing costs for purchase and sale of £1000 worth of investment trust shares.For large investors, the position is much less clear.

The aver age performance of unit trusts and investment trusts are too close to give any definite guidance, and what would appear to matter is the choice of the particular unit trust or investment trust and the ability of the fund management group running it.

In the long run, gearing and discounts should give the investment trust better scope for growth.Anyone thinking of investing either in a unit trust or investment trust should look at the following facts.

Investment trust advantages are: the ability to gear (if used wisely); lower management fees; the opportunity to buy assets at a discount; no forced selling of investments; flexibility of capital structure.

Unit trust advantages are: a greater choice (1559 unit trusts v 329 investment trusts); guaranteed dealing prices; lower administrative management costs (no Stock Exchange quotation charges or directors' fees); monitoring by trustee; and they are safer (no gearing - few unquoted shares).Knowledge of both types of collective investment is essential in order properly to advise your investment clients as to the correct choice in their particular circumstances.

It is thus vital that your investment manager is familiar with this field and has access to specialist expertise as and when he or she requires it.