QUESTION OF ETHICS

Q My accountant says I must open a separate client ledger for each client when acting for both lender and borrower.

Is that correct?

A A separate client ledger is usually necessary for each client of the firm.

However, rule 32(6) of the Solicitors' Accounts Rules 1998 permits a solicitor to use one client ledger for both lender and borrower in certain circumstances.

The funds for each client must be clearly identifiable - for example, the mortgage advance must be specified by reference to the amount, the purpose and the source of the funds.

It would not be sufficient to refer only to the amount and the source of the funds.

The lender must be an institutional lender which provides mortgages on standard terms in the normal course of its activities.

l We have been asked to make it clear that the answer which appeared on 27 July (see [2000] Gazette, 27 July, 50) was a corrected version of one published last year (see [1999] Gazette, 8 December, 36).

The word 'not' had been omitted from the penultimate sentence of the original article.

Aide memoirel The new Indemnity Insurance Rules will be effective from 1 September 2000.

Solicitors must have their new indemnity insurance in place by that date.

l The Establishment of Lawyers Directive 98/5/EC was implemented in the UK on 22 May 2000.

Lawyers from other EU states who are EU nationals and established in the UK have to register with one of the UK Law Societies or Bars.

Lawyers already practising in the UK have until 21 November 2000 to make their applications, unless they wish to take advantage of their new rights under the Directive at an earlier date.

l Question of ethics is compiled by the Law Society's professional ethics guidance team.

Send your questions for publication to Austin O'Malley, the Law Society, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch; tel: 020 7242 1222.