The solicitors' accounts rules - how safe is clients' money?

This article looks at the operation of the rules of professional conduct intended to ensure that money held by solicitors on behalf of their clients is properly and honestly accounted for. Significant trust is placed in solicitors with regard to clients' funds, with sums ranging from a few pounds to many millions of pounds passing through solicitors' hands. The Solicitors' Accounts Rules, and the enforcement mechanisms which underpin them, are the means by which the Law Society attempts to satisfy the public that their money is safe in solicitors' hands. The primary purpose of this article is not to detail the minutiae of the Accounts Rules, nor to chart the long and often difficult historical path to their introduction. These avenues have already been explored elsewhere. What this article does attempt to do is to assess the operation of the Accounts Rules in practice by looking at failures on the part of solicitors to comply. The greatest difficulty with this task is the lack of publicly available information regarding the way in which solicitors actually handle clients' money. The Law Society requires solicitors to certify their compliance with the rules and has an Investigation Unit to inspect the records of, inter alia, those suspected of default. However, these processes are not subject to public scrutiny. Similarly, the operation of the first line of disciplinary action against solicitors, the Office for the Supervision of Solicitors (OSS), is not subject to open scrutiny. The only readily available source of information regarding Accounts Rule breaches comes from the hearings and Findings of the Solicitors Disciplinary Tribunal (SDT). A total of 270 cases heard by the SDT were studied. These contained a total of 974 individual matters of misconduct: 425 of these (43.6 per cent) involved breaches of the Accounts Rules; a further 80 matters (8.2 per cent) involved the more specific allegation that the solicitor had misappropriated client funds. Misconduct involving the Accounts Rules was by far the largest single category before the Tribunal. The limited availability of information inevitably poses the risk that the results presented in this article are an incomplete analysis of Accounts Rules compliance, or even constitute an analysis which is skewed in some way. Unless solicitors' handling of clients' money, and the corresponding regulatory mechanisms, become more transparent, this is an unavoidable risk, but nevertheless a risk of which the reader should be aware. The information presented in the article is primarily qualitative. The first part will briefly outline the historical development of the Solicitors' Accounts Rules. Consideration will then be given to information obtained from SDT Findings in relation to various aspects of Accounts Rule breaches and the way in which the Law Society investigates and deals with these. The final part of the article will look at problems specifically faced by sole practitioners and then more generally at the way in which the Tribunal deals with solicitors who repeatedly appear before it for breaches of the Accounts Rules. Discussion of each of these areas is largely descriptive, presenting and classifying findings and providing discussion where appropriate. Constraints of space prevent engagement here with the wider ethical issues raised by the study. Rather, the present article sets as its goal the aim of adding to the stock of information about legal practice and conduct, around which ethical theory can be built