Question of ethics

Q I am an in-house solicitor and part of my work is debt recovery for my company and other companies in the same group.

Sometimes, debtors send cheques made out to me which are paid into the relevant company bank account.

I never see any cheques as all payments are directed straight to the finance department by the post room.

Do I need to provide an accountant's report in relation to these cheques?

A Yes, and keep the records required under rule 32 of the Solicitor's Accounts Rules 1998.

A solicitor who holds or receives client money must comply with the accounts rules.

If your employer, or another company in the group, banks a cheque made out to you, then you have received (and paid) client money for the purpose of the accounts rules.

It does not matter that the cheques never come into your possession.

It is possible to apply for a waiver of the obligation to deliver an accountant's report if the number of cheques in question is small or the cheques comprise a small volume of client money for an accounting period (see rule 35, note (ix) of the accounts rules on page 721 of the Guide to the Professional Conduct of Solicitors, 1999, eighth edition).

However, a waiver would not normally be given more than three years running.

Please note

Following an initial consultation paper on new rules for dealing with conflict and confidentiality issues, an additional consultation document has been prepared.

This will be the last opportunity to comment on these rules and their guidance, which will affect all solicitors.

The consultation period ends on 6 December 2002.

The new consultation document can be accessed on the Web (visit: www.lawsociety.org.uk and go to view all contents A-Z/Rules Review: consultation: Proposed rules and guidance of conflict and confidentiality) or in printed form from professional ethics (0870 606 2577).

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

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