Professional Documents
Culture Documents
1. Introduction
2. Object of Rules
3. Responsibility
Read pages 120 to 127 and pages 195 to 198 of the Professional Responsibility Manual 2006.
General Principles
- Note – P to P costs belong to client, not to firm! Cannot put in own acct – breach of rules 3
- Discip committee held in Cashin that all partners subj to discip proceedings. One of partners away on
holiday, not in firm.
- Myers case – difference between civil resp and discip resp – latter essentially punitive. Civil resp – only
imposed if there is personal complicity on part of solicitors concerned. If not, canot inflict personal resp on
him.
- (P to P) if a solicitor successfully concludes a case in court and recovers costs from the other side, they are
termed “party and party” costs
- not a complete indemnity to the successful litigant, but goes towards indemnifying some of the costs which
he ultimately would have to pay to his solicitor
- such costs will be paid by the defendant to the plaintiff as “party and party” costs
- solicitors often think that “party and party” costs belong to them an pay it into their office account
- Inquiry Committee was quite staggered to find that the solicitor, who had been in practice for some time,
had not appreciated that “party and party” costs are paid to the client to indemnify him partially for the costs
that he has incurred in bringing the case against the defendant
- It is not something which the solicitor can pocket: Re Cashin Howard [1989] 3 MLJ 129 (first few pages got
this case)
- (out court settn) Money paid pursuant to an out-of-court settlement or judgment is usually paid to the
solicitor of the successful party
- Solicitors’ Account Rules do not allow the solicitor to take such money out from the client account for his
own use without drawing a bill
Exceptions to rules:
- Rules x apply to trust acct because sep rules that apply to this
- Specific instructions – eg instructed by client to invest money (in writing – acknowledge instructions!) his
instructions supersede the rules
Legal Profession Act, s. 83(2)(j) empowers the Council or the Disciplinary Committee to impose sanctions on
solicitors for breaches of the Rules
NB: The Rules in these notes refer to the Legal Profession (Solicitors’ Accounts) Rules, unless otherwise stated.
2. RESPONSIBILITY
Is civil responsibility synonymous with a disciplinary responsibility?
Civil responsibility is not similar to disciplinary responsibility – involves an element of neglect, which
cannot be equated with civil responsibility
In a partnership, the responsibility for maintaining a proper book-keeping system is shared by all partners
(including salaried partners).
- “In arriving at this conclusion, the Disciplinary Committee failed to distinguish between ‘joint and
several responsibility’, a civil responsibility, on the one hand; and a disciplinary responsibility, on the
other. The confusion appears to have arisen because of the failure to appreciate that the exercise of the
disciplinary power is essentially punitive and penal and is exercised in appropriate case only where
there is personal complicity by the solicitor charged. It is apposite, in this connection, to quote the
words of Lord Atkin in Myers v Elman at p 302:
‘Misconduct of course may be such as to indicate personal turpitude on the part of the person committing it
and to lead to the conclusion that the party committing it, if an officer of the court, is no longer fit to act as
such. Over conduct such as that, punitive jurisdiction will be exercised, but it seems hardly necessary to
state that no punishment based on personal misconduct will be inflicted unless the party visited is himself
proved to be personally implicated. (Emphasis added).’
- It is true that in certain appropriate circumstances, the negligence of the solicitor in relation to a client
account (e.g. failure to exercise adequate supervision) may amount to professional misconduct, ‘if it is
inexcusable and is such as to be regarded as deplorable by his fellows in the profession’: per Lord Denning
in Re A Solicitor at p 815. But no one would dispute - and it has not been suggested otherwise - that such
cases involve an element of personal neglect or misdoing on the part of the solicitor charged.”
The position of a partner guilty of non-compliance with the accounts rules but without dishonesty, would depend
on all the circumstances of the case
3. CLIENT ACCOUNT
- “Client account” means a current or deposit account in the name of the solicitor at a bank or an approved
finance company in the title of which account the word “client” appears.
- ♦Why the word “client”?
o It is essential that all client accounts are designated in this way to avoid, in the event of the
bankruptcy or death of a sole practitioner, any difficulty which might arise as to the identity of
client’s money.
- Important that that word appears to avoid difficulties arising in events of death (of sole practitioner) or
bankruptcy
- Where money is held jointly with another firm of solicitors, not client’s money – since held by 2 firms.
Thus, not essential to put into client’s account – But may be required to be recorded in a memorandum form
noting “stakeholders money, held jointly”, no sole control from either firm
- Cannot use client’s account to purchase property – Use office account is ok
- Even if relationship is solicitor and his wife, must use client’s account
- Where not yet partner ie. employee, use client’s account, not office account
4. CLIENT’S MONEY
- “Client’s money” means money held or received by a solicitor on account of a person for whom he is acting
in relation to the holding or receipt of such money either as a solicitor, or in connection with his practice as a
solicitor, as agent, bailee, stakeholder or in any other capacity, but does not include -
- Rule 2 specifically enacts that client’s money does not include:
(1) money held or received by a solicitor-trustee on account of the trustees of a trust; or
(2) money to which the only person entitled is the solicitor himself or in the case of a firm of solicitors,
one or more of the partners in the firm
- It should be appreciated that specific instructions from a client (in writing or acknowledged by the solicitor
in writing) take precedence over the rules in relation to money received on the client’s behalf (see Rule
9(2)(a)).
STAKEHOLDER MONEY - IS THERE ANY DIFFERENCE?
- Stakeholders money is clients’ money unless it is placed on an account operated jointly by two firms of
solicitors. Money on a joint account is not clients’ money and since it is not the sole control of either
solicitor does not fall within the ambit of the Rules.
- However, it is preferable for such money to be separately recorded in “memorandum” form in the books of
account of each solicitor.
RULE 6
- - A solicitor cannot treat himself or herself as a client. This would be a breach of Rule 6.
- In consequence, a principal’s personal or office transactions cannot be conducted through client account and
it is a breach of the rules for a principal’s personal conveyancing transactions to be conducted through client
account. What about a solicitor and his wife?
In H.E. Cashin (an Advocate & Solicitor) [1988] 1 MLJ at page 380 :
C borrowed money and put into client’s account, not office account – Breach Rule 6 (see above)
Held: (Wee Chong Jin CJ)
- No admission by or on behalf of respondent of wilful disregard to the rules
- Ignorance is not an excuse
- Important to distinguish between ‘actual’ and ‘constructive’ knowledge – affects seriousness of
contravention and type of penalty to be imposed
a principal’s personal or office transactions cannot be conducted through a client’s account
it is a breach of the rules for a principal’s personal conveyancing transactions to be conducted through a
client’s account
“There was no admission by or on behalf of the respondent that he had wilfully disregarded the
provisions of that rule. Ignorance of the law is no excuse, but that does not make every breach of the law
a wilful one. What a person knows and what he ought to know are quite different matters. While every
practising solicitor ought to know of the requirements of rule 6, the distinction between actual
knowledge and constructive knowledge must be clearly appreciated, as it would affect the seriousness of
the contravention and hence the kind of penalty that ought to be imposed.
It is incumbent upon all practising advocates and solicitors to keep themselves apprised of the provisions
of the Act and Rules made thereunder, particularly those provisions and rules which govern the practice
of the profession.”
No money other than money under rules 3, 4 and 5 to be paid into client account
6. --(1) No money, other than money under rules 3, 4 and 5 which a solicitor is required or permitted to pay into a
client account, shall be paid into a client account.
(2) It shall be the duty of a solicitor into whose client account any money has been paid in contravention of this
rule to withdraw the money without the delay on discovery.
Cashin - Facts:
The respondent was an advocate and solicitor of the Supreme Court and a senior partner of the law firm of
Murphy and Dunbar. In the present proceedings, an order nisi was made to discipline him under s 80 of the Legal
Profession Act (Cap 161) (the Act) and he was ordered to show cause why he should not be dealt with
accordingly. The facts as far as they were undisputed were as follows. The complainant instructed the respondent
to act for a company (the company) of which the complainant was, at all material times, a director and principal
shareholder. The respondent was instructed to resist a winding-up petition (the petition) that had been presented
against the company. The respondent accepted the instructions and assigned a legal assistant in the firm to assist
him in the matter. The petition against the company was dismissed. Later, the taxed party and party costs which
were awarded to the complainant were paid by the respondent`s law firm into the office account.
The events that followed the dismissal of the petition were acutely in dispute. The complainant claimed that the
respondent had agreed to limit the costs payable by her to $25,000 to the respondent`s law firm. The respondent
denied that he had agreed to this and claimed that the agreement was that such costs would only be limited if the
petitioner (of the winding-up petition) was unable to bear the party and party costs awarded against it. After that,
the complainant wrote a letter, enclosing correspondence between herself and the respondent`s law firm, to the
Law Society describing the events that had occurred and sought the help of the Society in resolving their dispute.
Disciplinary proceedings against the respondent were started. He was charged with breach of r 3 of the
Solicitors` Accounts Rules 1967 by paying client`s money into the office account, breach of s 109(1) of the Act
in that he taxed party and party costs in excess of the agreed solicitor and client costs, and the wrongful
appropriation of party and party costs which lawfully belonged to the complainant. The Disciplinary Committee
(the Committee) hearing the matter determined that cause of sufficient gravity existed against the respondent in
respect of all three charges. The Committee concluded that although the complainant`s letter to the Law Society
did not expressly allege misconduct by the respondent, due allowance should be made for the fact that it was
written by a lay person. There was thus a complaint under s 82(1) of the Act. The Committee also decided that
each partner in the respondent`s law firm had a joint responsibility to ensure that there was no breach of the
Solicitors` Accounts Rules. As regards the second charge, the Committee found that the complainant was a more
credible witness than the respondent, and found the respondent guilty of the charge. In relation to the third
charge, the Committee decided that the party and party costs which were appropriated to the office account wer e
undoubtedly in accordance with normal book-keeping practice, taken as profit for the year which was
distributable as profit among the partners of the firm, and there was no evidence from an accountant or auditor to
prove the contrary.
Holdings:
Held discharging the order nisi to show cause:
(1).A `complaint` meant an accusation of misconduct. A complaint that concerned a civil dispute simpliciter,
unaccompanied by any allegation of misconduct, did not constitute a `complaint of the conduct` within s 82(1) of
the Act.
(2).In the complainant`s letter to the Law Society, she made no allegation of impropriety or misconduct on the
part of the respondent. The letter merely sought guidance and help in the dispute with the respondent`s law firm.
Since the letter made reference to and enclosed an exchange of correspondence between the complainant and the
respondent`s law firm, it was necessary to examine these in some detail to see whether or not they contained any
allegation of misconduct against the respondent personally.
(3).The letters showed that there was a dispute between the complainant and the respondent`s law firm as to the
precise terms of the agreement that they had entered into regarding costs. There was no suggestion that the
respondent had ever intended to deprive the complainant of anything that might be due to her.
(4).This was a dispute which should be resolved in a civil court. A breach of contract simpliciter could not in any
way constitute an allegation of misconduct.
(5).The Committee hearing the matter took the approach that the complainant could not be expected to put her
allegations in legal language or to refer to the provisions of the Act. This, however, ignored the fact that the
complainant`s letter of complaint was drafted with the assistance of another advocate and solicitor. The
conclusion of the Committee was thus against the weight of evidence, and without foundation. There was
therefore no valid `complaint` against the respondent and the proceedings failed at the outset.
(6).The first charge against the respondent was a charge of a personal character, and related strictly to the conduct
of the respondent himself. It was agreed that at the time of the payment of the money into the office account, the
respondent was not in Singapore and had nothing to do with the payment.
(7).The Committee`s conclusion that there was joint responsibility for the payment failed to distinguish between
`joint and several responsibility`, a civil responsibility, on the one hand and a disciplinary responsibility on the
other. The exercise of disciplinary power was essentially punitive and penal and was exercised in appropriate
cases only where there was personal complicity by the solicitor charged. In certain cases, the negligence of a
solicitor in relation to a client account could amount to professional misconduct, `if it is inexcusable and is such
as to be regarded as deplorable by his fellows in the profession`.
(8).In the present case, the Committee made no finding that the respondent was personally implicated in the
breach of the rules, and there was no evidential basis for such a finding. The first charge therefore failed.
(9).As regards the second charge, in deciding whether the Committee came to the correct finding that there was
an oral agreement between the respondent`s law firm and the complainant limiting solicitor and client costs to
$25,000, the whole of the evidence had to be examined to see if the evidence pointed to equal probability of an
agreement which was as the respondent claimed in his defence.
(10).The Committee`s findings were essentially matters of fact, but where it appeared from the evidence that the
wrong decision in fact has been reached, it could be reversed, due regard being had to the court`s disadvantage in
not seeing or hearing the witnesses.
(11).There was no dispute that there was an agreement respecting costs, the dispute relating solely to the terms of
the agreement. It was necessary to test the assessment of the Committee, on an objective litmus test, by reference
to a number of specific issues.
(12).The findings of the Committee on the second charge could not be sustained. Because of this decision, it was
unnecessary for the court to deal with the alternative submission.
(13).In a fundamental sense, the third charge was contingent upon the first charge. Since the respondent was not
personally implicated in the first charge, the person responsible for the appropriation under the second charge
was not the respondent. The Committee failed to appreciate that they had no basis for their inference. In the
absence of evidence from the firm`s accountant or a public accountant, it was not a matter on which the
Committee could properly infer that the appropriated money would, in any event, have been appropriated at a
later date by the respondent and his partners. The onus of proof lay throughout on the Law Society to prove that
wrongful appropriation took place. This onus was not discharged.
- Rule 3 of the Solicitors’ Accounts Rules provides that subject to certain exceptions, every solicitor who
receives client’s money must pay it into a client account without delay, which in normal circumstances
means either the day of receipt or on the next working day. There is no objection to a solicitor keeping as
many client accounts as he or she thinks fit.
- Specific instructions from client in writing or acknowledged by Solicitor in writing take precedence over
rules in relation to money received on client’s behalf (Rule 9 (2)(a))
Where solicitor under no obligation to pay client’s money into client account
9.
(2) Notwithstanding the provisions of these Rules, a solicitor shall not pay into a client account, money held or
received by him --
(a) which the client for his own convenience requests the solicitor in writing to withhold from such account;
- “Solicitor” is defined to include a law corporation and a Joint Law Venture (Rule 2)
2.
"solicitor" means an advocate and solicitor of the Supreme Court and includes a firm of solicitors, a law
corporation and a Joint Law Venture;
- Thus, if a solicitor is acting in person for a conveyancing transaction, then if any money is to be received on
the solicitor’s behalf, he cannot deposit the same into his client’s account – Breach Rule 2, otherwise
- It instills public confidence
- The Solicitors’ Accounts Rules provide that certain items of non-client money may be paid into client
account.
- These items consist of:
a) trust money (Solicitor-trustee);
b) money belonging to the solicitor placed in the client account in order to open or maintain the account;
c) money paid into client account to replace any sum which has been withdrawn from the account in
contravention of the Accounts Rules;
d) Money received by a solicitor which consists of both client’s money and non-client money.
- Rule 7 of the Solicitors’ Accounts Rules deals with the circumstances where a solicitor may withdraw
client’s money from client account.
- Authority to withdraw – solicitor must be holding a current practising certificate (Rule 11(7))
11.
(7) Unless authorised in writing by the Council, no money may be withdrawn from a bank account or a deposit
account with an approved finance company, being or forming part of a client account, otherwise than under the
signature of a solicitor who holds a current practising certificate.
- Rule 7(a) – circumstances (other than in the case of trust money) under which money can be drawn from a
client’s account
7(a).
(i) Money required for a payment to or on behalf of the client;
(ii) Money required in full or partial reimbursement of money expended by the solicitor on behalf
of the client
(iii) Money drawn on the client’s authority;
(iv) Money require toward payment of the solicitor’s costs where bill of costs or other written intimation
of the amount of the costs incurred has been delivered to the client and the client has notified that the
money held can be applied towards or in satisfaction of such costs
- the Council has ruled since 1991 that before a solicitor can deduct monies from a client account in
satisfaction of his costs, he must:
(i) have delivered to the client a bill of costs or other form of written intimation of the amount of
costs incurred;
(ii) have notified the client that such an amount will be so deducted in satisfaction of his or her costs;
and
(iii) have allowed a lapse of two working days after giving the notification referred to in sub-paragraph
(2) before transferring such amount of costs out of the client’s account
- Failure to do all of the above = breach of the Rules + guilty of professional misconduct under s. 83(2)
LPA
- Defalcation of client’s monies is a very serious matter – solicitor is a person who is put in a position of trust
by his client
- Notably, solicitors can hold large amounts of monies for their clients
- The withdrawal for costs must be for specific sums which relate to the bill or other written instrument
which has been delivered to the client
- Costs and disbursements should be transferred out of client account as soon as possible in accordance
with these provisions. Cannot leave sums or parts of it in acct as a cushion – in case there is mistake in
future so that there is some money left. Cannot do this! The minute you notice, must rectify immed.
- If a solicitor wishes to make payment on behalf of a client in excess of funds held for that client in the
client account, the excess payment must be out of his office or personal account
- payment to or on behalf of client should as far as possible be made by a crossed cheque
- solicitor should use his discretion in drawing against a cheque received from or on behalf of a client
before it has been cleared.
Cases:
Solicitor paid client’s money into personal account and used money for personal purposes
In re S Fung, a Solicitor [1941] MLJ 173
Respondent solicitor paid cheque for $1960 (entitled to client) into his own Bank Account. He also used some
of client’s money for purposes which did not concern his client.
Held:
If the solicitor does not keep his client’s money intact and if he uses some of it for purposes which do not
concern the client then there is a misappropriation at least for a time of at least part of the client’s money even
though later on the full amount due to the client is paid to him.
This amounts to professional misconduct.
- respondent did not keep his client’s money intact, equally clear that he used some of it for purposes which
did not concern his client
- thus, there was misappropriation for a time of part of the client’s money and this, in our opinion,
amounted to professional misconduct
- solicitor was suspended for a period of nine months
- truth was solicitor tried to move money through the account so that he could overcome some personal
difficulties
- NB: Important to ensure client’s account in credit and that the funds have been cleared y the bank, when
using money from client’s account
8. RULE 8
- Rule 8(1) - apply to Council - states that the Council’s written authority is necessary for the withdrawal of
money from client account, other than as permitted by Rule 7.
- Rule 8(2)- Methods of withdrawal - of the Solicitors’ Accounts Rules provides that where money is to be
withdrawn from client account for payment to a solicitor, such money must be withdrawn either cheque in
favour of the solicitor or by way of a transfer to the solicitor’s office or personal account.
- Rule 8(3) - Cannot use cash cheque - states that no money should be drawn from the client account
under Rule 7(c) or (d) by a cash cheque.
- Rule 8(4) No money shall be drawn from a client account by a cash cheque except with the written
authority of the client.
- Rule 8(5) Unless the solicitor has engaged or employed a book-keeper for the purposes of rule 11(8),
no sum exceeding $5,000 shall be drawn from a client account except upon a cheque (or other
instruction effecting the withdrawal) signed by 2 solicitors.
Where solicitor under no obligation to pay client’s money into client account
9. --(1) Notwithstanding the provisions of these Rules, a solicitor shall not be under obligation to pay into a client
account client's money held or received by him --
(a) in the form of cash, and is without delay paid in cash in the ordinary course of business to the client or on his
behalf to a third party;
(b) in the form of a cheque or draft which is endorsed over in the ordinary course of business to the client or on
his behalf to a third party and is not passed by the solicitor through a bank account or an account with an
approved finance company account; or
(c) which he pays into a separate bank account or into a separate account with an approved finance company
opened or to be opened in the name of the client or of some person designated by the client in writing.
(2) Notwithstanding the provisions of these Rules, a solicitor shall not pay into a client account, money held or
received by him --
(a) which the client for his own convenience requests the solicitor in writing to withhold from such account;
(b) for or towards payment of a debt due to the solicitor from the client or in reimbursement of money expended
by the solicitor on behalf of the client; or
(c) which is expressly paid to him --
(i) on account of costs incurred, in respect of which a bill of costs or other written intimation of the amount of the
costs has been delivered for payment; or
(ii) as an agreed fee (or on account of an agreed fee) for business undertaken or to be undertaken.
(3) Where money includes client’s money as well as money of the nature described in paragraph (2), that money
shall be dealt with in accordance with rule 5.
(4) Notwithstanding the provisions of these Rules, the Council may upon an application made to it by a solicitor
specifically authorise him in writing to withhold any client's money from a client account.
- Rule 9 of the Solicitors’ Accounts Rules provides a number of circumstances where a solicitor is under
no obligation to pay into client account client’s money held or received by the solicitor.
- The circumstances are:
- Eg private summons cases – medical fees. Normally cases settled before magistrate who will direct that
one side pay 1000. if acting for injured party, technically due to rule 3, must run to bank and open up
acct and give it to client. But don’t need to do this, can pay straightaway – do up written memorandum
to reflect this
- 9(1)(a) where money is received in the form of cash and is without delay paid in cash in the ordinary
course of business to the client or on the client’s behalf; or
- (b) where money is received in the form of a cheque which is endorsed over in the ordinary course of
business to the client or on his behalf to a 3rd party; or
- (c) where money is paid into a separate bank or finance company account in the name of the client or
some other person designated by the client in writing or acknowledged by the solicitor in writing to the
client.
- 9(2) Notwithstanding the provisions of these Rules, a solicitor shall not pay into a client account,
money held or received by him
- (a) which the client for his own convenience requests the solicitor in writing to withhold from such
account;
- (b) payment of a debt due to the solicitor or in reimbursement of money expended by the solicitor.
- (c) (i) On account of costs in respect of which a bill of costs or other written intimation of the
amount of the costs has been delivered for paymen. (ii) Agreed fee or on account of an agreed fee)
for business undertaken or to be undertaken.
- Debt owed to solicitor – Receipt of costs disbursements – council passed rule - where money towards costs
and disbursements collected and no work has yet commenced, or no written intimation of costs or bill of
costs has been rendered to the client, then the sum collected must be paid into the firm’s client’s account
- An agreed fee – agreement in writing – where money is expressly paid to the solicitor as an agreed fee or on
account of an agreed fee for business to be undertaken, Rule 9(2)(c)(ii) entitles the solicitor to pay the sum
to his or her office account without rendering a bill of costs or written intimation of costs
- Rule 11 of the Solicitors’ Accounts Rules lays down detailed rules as to how the books of account of
solicitors must be kept.
Cash books, ledgers, journals, etc.
11. --(1) Every solicitor shall at all times keep properly written up in the English language such cash books,
ledgers and journals and such other books and accounts as may be necessary --
(a) to show all his dealings with --
(i) client’s money received, held or paid by him; and
(ii) any other money dealt with by him through a client account;
(b) to show separately in respect of each client all money of the categories specified in sub-paragraph (a) which
is received, held or paid by him on account of that client; and
(c) to distinguish all money of the categories mentioned in sub-paragraph (b) received, held or paid by him, from
any other money received, held or paid by him.
(2) All dealings referred to in paragraph (1) (a) shall be recorded as may be appropriate --
(a) in a client’s cash book or a client’s column of a cash book; or
(b) in a record of sums transferred from the ledger account of one client to that of another,
and in addition --
(i) in a client's ledger or a client’s column of a ledger; and
(ii) in a journal.
(2A) No other dealings shall be recorded in such client’s cash book and ledger mentioned in paragraph (2) or, as
the case may be, in such client's columns and journal.
(2B) All dealings of the solicitor relating to his practice as solicitor other than those referred to in paragraph (1)
(a) shall, subject to compliance with the Legal Profession (Solicitors’ Trust Accounts) Rules (R 9), be recorded in
such other cash book and ledger or such other columns of a cash book and ledger and such journal as the solicitor
may choose to maintain.
(3) In addition to the books and accounts referred to in paragraphs (2) and (2B), every solicitor shall keep a
record of all bills of costs (distinguishing between profit costs and disbursements) and of all written intimations
under rules 7 (1) (a) (iv) and 9 (2) (c) (i) delivered or made by the solicitor to his clients, which record shall be
contained in a bills delivered book or a file of copies of such bills and intimations.
(4) Every solicitor shall within one month of his commencing practice on his own account (either alone or in
partnership) and thereafter not less than once in every succeeding month cause the balance of his clients’ cash
books (or clients' column of his cash book) to be reconciled with his clients’ bank statements and shall keep in
the cash book or other appropriate place a statement showing the reconciliation.
(5) No solicitor shall make use of any computerised system of book-keeping for the purpose of this rule unless
any information which is recorded on such computerised system is capable of being reproduced in the form of a
printed document within a reasonable time.
(6) Every solicitor shall preserve for a period of at least 6 years from the date of the last entry therein --
(a) all accounts, books, ledgers and records kept by him under this rule; and
(b) all bank statements received by him in respect of any client’s account.
(7) Unless authorised in writing by the Council, no money may be withdrawn from a bank account or a deposit
account with an approved finance company, being or forming part of a client account, otherwise than under the
signature of a solicitor who holds a current practising certificate.
(8) Subject to rule 11A, a solicitor may engage or employ a book-keeper to keep his books and accounts
properly written up and reconciled as required by this rule.
- [Legal Profession (Professional Conduct) Rules 1998 – Rule 19: An Advocate and Solicitor shall
expeditiously render statement of accounts if requested by his client
Statement of accounts
19. An advocate and solicitor shall expeditiously render statements of accounts if requested by the client.
- NB: Decision above was when it was not necessary to have Accountant’s Report for the client account –
which must now be submitted before you may apply for your practising certificate.
LPA RULES
Section 27A(1) LPA:
Where, at any time during the currency of the practising certificate of a solicitor, s. 25A would have effect in
relation to him by reason of any such circumstances as are mentioned in s. 25A(1) if he were to make an
application for a practising certificate at the time, a judge may, upon an application by the AG or the Council
made by originating summons and served upon the solicitor, direct that the current practising certificate of the
solicitor shall have effect subject to such conditions as the judge thinks fit.
(2) Such rules may provide for the manner in which the matters referred to in subsection (1) shall apply to law
corporations or to Joint Law Ventures or Formal Law Alliances registered under Part IXA.
(3) Such rules shall not come into operation until they have been approved by the Chief Justice who may if he
thinks fit consult any of the other Judges before giving his approval.
(4) Disciplinary proceedings may be taken against any solicitor who contravenes any rules made under this
section.
Basic Books (as required by the Rules) to be opened and maintained by the accounting staff:
(i) Cash Book – office and client;
(ii) General Ledger;
(iii) Client Ledger;
(iv) Bills Ledger;
(v) Bills Delivered Book;
(vi) Journal;
(vii) Copies of Bills;
(viii) Bank Reconciliation Statements – office and client;
(ix) Bank Statements/ passbooks – office and client; and
(x) Cheque Books and Stubs – office and client.
New Developments
- From 1 April 2004, if a law practice does not wish or cannot implement a 2 lawyer signatory control to
authorise payments from the client account that is above $5000, the law practice must engage a book
keeper to draw up the relevant books of accounts on a monthly basis as required by rule 11(1) and (2)
and also carry out the reconciliations of the client account as stipulated by rule 11(4)
- solicitors cannot merely rely on their book keeper or reporting accountant to check their accounting system
or supervise their client’s accounts
- it is the solicitor who faces disciplinary action for breaches of the rules and of the Legal Profession
(Accountant’s report) rules]
Process:
- At least once every month
- Solicitor to draw up a statement of the total liabilities to clients (extracted from the balances shown on the
client’s ledger accounts) showing the funds available in the clients’ bank account and fixed deposit accounts
- Law Society Guidelines – once a month (!)
13. COMPUTERISED RECORDS
No solicitor shall make use of any computerised system of book-keeping for the purpose of this rule unless any
information which is recorded on such computerised system is capable of being reproduced in the form of a
printed document within a reasonable time.
ENGAGEMENT OF A BOOK-KEEPER
Rule 11A –
(1) A solicitor shall not engage or employ a bookkeeper for the purposes of rule 11(8) unless he has obtained the
written approval of the Council to do so.
(2) An application for the approval of the Council to engage or employ a book-keeper for the purposes of rule
11(8) shall be submitted to the Council in such form as the Council may require and shall be accompanied by a
statutory declaration affirmed or sworn/ If
the proposed book-keeper is an accounting firm, accounting corporation or is a firm or corporation providing
book-keeping services, the solicitor shall submit the application to the Council, accompanied by a statutory
declaration stating that
(i) no proprietor or partner of the accounting firm or an accounting corporation as the case may be, is an
immediate family member of the solicitor;
(ii) undertaking that he will inform the Council in writing immediately if the book-keeper encounters any of the
difficulties referred to in paragraph (8); and
(iii) undertaking that he will inform the Council in writing immediately if there are any changes in the matters
referred to in sub-paragraph (i);
16. SAFEGUARDS
In order to minimise unauthorised withdrawals, the solicitor should consider very carefully the safeguards which
could be built into the system.
Safeguards
- Minimise unauthorised withdrawals Eg. confirming parties’ passwords
- Internal controls:
(a) Segregation of duties – accountants; book-keepers
(b) Reconciliation statements – accounts in order
(c) Issued crossed cheques, not cash-cheques
17. COMPLIANCE OF THE SOLICITORS’ ACCOUNTS RULES - POWERS OF THE LAW SOCIETY
TO INSPECT ACCOUNTS
To ensure compliance with SAR, the Law Society is empowered to inspect accounts (Rule 12)
General Principles
An inspection carried out under this Rule overrides any confidence or privilege between solicitor and client.
Solicitor/client privilege
- client’s confidentiality
- Thus may object to Accountant’s examination
- If so, Accountant will qualify his report
- Where report qualified, affects practising certificate to be issued to solicitor
- Solicitor will then be called up by Registrar to explain why objected/ confidentiality
Rule 2
What are the consequences for failure to adhere to the Rules?
Operative word - “at time of receipt”
Fixed deposits and their management
2. --(1) Subject to rule 4, when a solicitor holds or receives money for or on account of a client, the solicitor shall
--
(a) deposit such money separately in a bank or an approved finance company by way of fixed deposit repayable
on demand in the name of the solicitor or his firm and the name of the client or the matter concerned, and
account to the client for any interest earned thereon; or
(b) pay to the client out of his own money the sum equivalent to the interest which would have accrued for the
benefit of the client if the money had been deposited separately in a bank or an approved finance company by
way of fixed deposit as provided in sub-paragraph (a).
(2) Nothing in paragraph (1) shall require a solicitor to deposit or to account to a client for interest or to pay
interest to a client unless --
(a) the sum of money received by the solicitor exceeds $5,000 at the time of receipt; and
(b) the instructions to the solicitor at the time of receipt are such that he knows that the sum of money so received
will not, within 4 months thereafter, be either wholly disbursed or reduced to a sum below $5,000 and the sum of
money so received is not in fact within such period so disbursed or reduced.
(3) In this rule, “approved finance company” means any finance company registered under the Finance
Companies Act (Cap. 108) which is approved by the Minister to accept deposits of client's money for the purpose
of these Rules
See Rule 3
Client's remedies
3. --(1) Without prejudice to any other remedy which may be available to him, any client who feels aggrieved
that interest, or a sum equivalent thereto, has not been paid to him under these Rules shall be entitled to require
the solicitor to obtain a certificate from the Council as to whether or not interest ought to have been earned for
him.
(2) If so, the amount of such interest and on the issue of such a certificate the sum certified to be due shall be
payable by the solicitor to the client.
- Rules governing when a solicitor holds or receives money for or on account of a client
- See especially Rule 2(2)
- If breach, write to Council of Law Society and make good the interest: Rule 3
Saving
4. Nothing in these Rules shall --
(a) affect any arrangement in writing whenever made between a solicitor and his client as to the application of
the client's money or interest thereon; or
(b) apply to money received by a solicitor, being money subject to a trust of which the solicitor is a trustee.
- Council of Law Society can impose certain practice directions, provided offence is serious
- Examples:
- C disappeared but monies still in client account – Solicitor to satisfy outstanding bill
- Suspect monies in client’s account obtained by fraud – how?
(2) Such an application shall be served on the advocate and solicitor concerned and upon the hearing thereof
the Judge may make such order as he may think fit and may also make such order for the payment of costs as
may be just.
(3) Disciplinary proceedings may be taken against any solicitor if in, or in relation to, an application for a
practising certificate he makes a false statement material to the application.
(2) Such due cause may be shown by proof that an advocate and solicitor
…
(j) has contravened any of the provisions of this Act in relation thereto if such contravention warrants
disciplinary action;
(5) In any proceedings under this Part, the court may in addition to the facts of the case take into account the
past conduct of the person concerned in order to determine what order should be made.
(6) In any proceedings instituted under this Part against an advocate and solicitor consequent upon his
conviction for a criminal offence, an Inquiry Committee, a Disciplinary Committee and a court of 3 Judges of
the Supreme Court referred to in section 98 shall accept his conviction as final and conclusive.
Penalties for Breach
• conviction of errant solicitor for criminal breach of trust
• invariably leads to show cause proceedings under s. 95
LPA s95. —(1) Within 21 days of being ordered to pay a penalty by the Council, the advocate and solicitor
concerned may apply to a Judge to set aside the order.
(2) Such an application shall be made by way of originating summons and shall be served on the Society and
shall be heard in chambers unless the Judge of his own motion or on the application of any party sees fit to order
a hearing in open court.
(3) Upon the hearing of the application, the Judge may —
(a) affirm or vary the penalty; or
(b) set aside the order for a penalty,
and may make an order for payment of costs by or to either the Society or the applicant as may be just.
(4) If no such application is made or if the order for a penalty is affirmed or varied by the court, the advocate and
solicitor shall pay the penalty to the Society.
(5) Any penalty not paid may be recoverable by the Society as a judgment debt.
Due cause
while not every conviction of a criminal offence would imply a defect of character rendering a solicitor unfit
for his profession, the fact that the offence involved dishonesty committed by a solicitor in his professional
capacity as an advocate and solicitor was sufficient in itself to demonstrate that due cause had been shown:
Law Society of Singapore v Caines Collin [2004] SGHC 250
Caines - Facts
The respondent was an advocate and solicitor, and the sole proprietor of the law firm M/s Khosa & Caines.
On 2 September 2002, he pleaded guilty to dishonestly misappropriating at least $199,550.51 of his clients’
moneys and was convicted on four charges of criminal breach of trust under s 409 of the Penal Code (Cap
224, 1985 Rev Ed). Seven other charges were taken into consideration, and he was sentenced to a total of four
years’ imprisonment. The Law Society of Singapore subsequently commenced disciplinary proceedings
against him, and applied to make absolute an order to show cause under s 98(5) of the Legal Profession Act
(Cap 161, 2001 Rev Ed) (“the LPA”).
Held, granting the application and striking the respondent off the roll:
(1) Section 83(6) of the LPA states that the court must accept the respondent’s conviction as final and
conclusive. Although not every conviction of a criminal offence would imply a defect of character that
rendered a solicitor unfit for his profession, the present case was straightforward. The fact that the offences
involved dishonesty committed by the respondent in his capacity as an advocate and solicitor was sufficient in
itself to demonstrate that due cause had been shown: at [11] to [12].
(2) Where a solicitor has been convicted of a criminal offence involving fraud and dishonesty, the court has
almost invariably chosen to strike him off the roll. The practice of law is an honourable profession that
demands the highest degree of integrity and trustworthiness from its members. The respondent’s appalling
conduct demonstrated that he was entirely unfit to remain on the roll, and the only appropriate order was to
strike him off the roll of advocates and solicitors: at [14] and [17].
in such circumstances, the court will, upon due cause being shown, order that the errant solicitor be
stuck off the roll
Mitigating factors
- in cases of proven dishonesty, mitigating factors did not tilt the balance towards the more lenient sanctions
of suspension and censure except where they were consistent with the objectives of preserving the good
name of the legal profession and of the protection of the public:
occupational stress, it has been held, can never be an excuse for dishonesty: Law Society of Singapore
v Ezekiel Caleb Charles James [2004] 2 SLR 256
Facts
The respondent was an advocate and solicitor, and an equity partner of M/s Khattar Wong & Partners (“the
firm”) at the material time. The respondent negligently settled a suit in excess of the mandate granted to him
by his client. To conceal his negligence, the respondent made unauthorised withdrawals totalling $128,000
from the firm’s omnibus clients’ account and paid it over to the Public Trustee in settlement of the claim. The
respondent was subsequently charged and convicted of one count of criminal breach of trust under s 406 of the
Penal Code (Cap 224).
The Law Society relied on the respondent’s conviction and applied to make absolute an order to show cause
and for disciplinary action to be taken. Before the court, the sole issue was the appropriate order to be made
under s 83(1) of the Legal Profession Act (Cap 161). The respondent contended that a striking off was not
warranted as there were significant mitigating factors. These were: (i) he had not benefited financially from
the unauthorised withdrawals; (ii) he had made full restitution; and (iii) he had been under stress at the time of
the offence.
Held, granting the application and striking the respondent off the roll:
(1) In cases involving solicitors who had been convicted of a criminal offence, the court considering the
appropriate order ought to, first and foremost, keep in mind the need to preserve the good name of the
profession and the protection of the public. The court could only consider mitigating circumstances so far as
was consistent with these two related objectives: at [10].
(2) Mere censure or suspension would not have been appropriate in the present case. Though the respondent
did not benefit financially from his actions, that did not alter the fact that he jeopardised his clients’ interests in
order to conceal his own negligence: at [11].
(3) Further, little weight could be given to the fact that he made full restitution of the moneys from his own
funds and suffered a financial loss. It was the respondent’s own negligence that caused him to the make the
unauthorised withdrawals in the first place: at [12].
(4) In addition, stress was part and parcel of the legal profession and could not be an excuse for dishonesty:
at [14].
In The Law Society of Singapore v Chiong Chin May Selena [2005] 4 SLR 320:
respondent had a history of manic-depressive psychosis
she had been hospitalized for her condition and had received electro-convulsive therapy for post-natal
depression
as a result of her illness, she was unable to hold onto any jobs for any substantial length of time, and finally
decided to set up her own law practice
unfortunately, she was clearly not equipped professionally/mentally to cope with the rigours and demands of
a sole proprietorship
(1) her first mistake was making her husband a co-signatory of the firm’s client and office accounts, which was
a breach of s. 77(2)
(2) this was compounded when the Law Society discovered, after she had ceased practice without notice,
(3) that she had failed to prepare or maintain any of the requisite financial records or documents mandated by
the Solicitors’ Accounts Rules
she was therefore charged for contravening s. 83(2)(b) and 83(2)(j)
- Why even have client’s account? – shldnt we just let the banks do it? Might even be more efficient.
- Sole proprietorship
- Law soc on 1 mar 2003 published guidance note for lawyers on prevention of money laundering and funding
of terrorist activities
o Duty f every person to disclose a suspicious transaction report to police subj to sol and client
privilege if suspects any property or money he holds rep proceeds of drug trafficking or
belongs to terrirosit under
Corruption, drug trafficking and other serious crimes (confiscation of benefits) act
Terrorism (suppression of financing) act 2002
- Money laundering – criminals conceal illicitly acd fudns by converting them into legit income to maintain
control over the same under cover of legit income
- See guidance note on website of law soc
o Impt for lawyers to know their client and business to avoid inadvertently assisting criminals
- LPPCR in 2006 – will be amended to req lawyers to obtain satisf evid of identify of clients to ensure dealing
with real person or body before acting for them
- The now ur client reqt is cardnal rofess duty for every lawyer to comply with before sol client rr is estd
before any money deposited into client account
- See PD issued by council
- Nec to ensure sg lawyers meet stds reqd by Financial Action Task Force set up under Organisation for Eco
Cooperation and Devpt
- Council under amended rules empowered t carry out inspection of law practice to ascertain whether rule
changes complied with
Letters of engagement
- State why req proof of identity through completion of practice’s std foirm with supporting identity doc
before accepting retainer
- Advise client tt reqd to report to auth if suspect tt client is money laundering
- Also advise tt relevant auth can direct u to disclose docs to them and must do s unless law of sol-client
privilege applicable
Keeping records
- To prove took steps to est identiy o client – new compliance rule for law practices
- Msut retain for 5 yrs docs used to determine identity of client after matter completed
- Disclosure of info must be refused if breaches sol-client privilege