The High Court last month backed new Law Society procedures for dealing with statutory trusts, through which the Society currently holds millions of pounds of unclaimed client and solicitor funds following interventions into law firms.

As of 31 January, there were 1,089 individual trusts holding almost £57 million, although most of the money is concentrated in a far smaller number of the trusts.


The decision by Mr Justice Lawrence Collins came in a complex test case brought by the Society itself, which since 2003 has been concerned about operation of the trusts under the Solicitors Act 1974 - which is not very clear on the Society's duties - including whether it was doing enough to identify, contact and account to those for whom money was held.


It was also unsure whether it was properly using the power for the Solicitors Compensation Fund to recover from the trusts pay-outs it makes to those who are entitled to client account monies.


A former practice of directing clients to the fund has been altered so that, where the client account has been reconciled and verified as intact, money can be paid out directly from the trust. However, the Law Society has major problems in those interventions where the client account is deficient in funds and records, which are two of the primary causes of interventions in the first place.


The judge agreed with the Society that these should be construed as statutory public law trusts, and then supported its approach on various operational issues.


Welcoming the judgment as 'very constructive', a Regulation Board spokesman said: 'It enables us to continue modernising how we deal with money received on intervention into solicitors' practices. The Society itself discovered the problems and set about correcting them and ultimately seeking the approval of the court to the underlying principles and new processes.'