TUTORIAL 15 QUESTION 2 (a)
Discuss Mr Vellu's conduct in relation
to the Solicitor's Account Rules 1990.
WHAT IS SOLICITORS' ACCOUNT
RULE 1950?
The solicitor's duties pertaining to the
management of accounts and clients' money
are statutorily spelt out in the Solicitors Account
Rules 1990 (SAR 1990).
SAR 1990 is a piece of legislation that was
introduced by the Malaysian Bar Council in
exercise of the powers conferred by Section
78(1) and (2) of the Legal Profession Act 1976 .
The SAR 1990 provides for the rules that must
be obeyed by all legal practitioners when
managing the firms' accounts especially when
dealing with clients' money.
PURPOSE OF SAR 1990.
The main purpose of the SAR 1990 is to
regulate the proper conduct and practice in
the opening, maintaining and operating of
client's money in the client's account .
These rules are also intended to minimize the
risk of delinquent solicitor misappropriated
client's money.
In this respect the SAR 1990 imposed rules to
regulate the conduct and management of a
"client account" where the "clients' money"
is deposited.
CLIENT ACCOUNT
Section 78(1) and (2) of the Legal Profession Act
1976 requires the advocates and solicitors to
open and keep the accounts of clients money and
subsection (2) of the Act provides for the opening
and keeping by every advocate and solicitor who
is a sole trustee, or who is co-trustee with one or
more of his partners, clerks or servants, of an
account at a bank for moneys of any trust of
which he is such a sole trustee or co-trustee.
Generally, the money paid by client will be kept in
an account specifically maintained for client
distinct from that of the firm.
Any expenses used for the firms purpose must
be from the firms account which is also known
as the office account.
Withdrawal from clients account is prohibited
if it is to be channeled for the firms purpose,
except of course the legal fees which belongs
exclusively to the solicitors as their
remuneration.
COMPONENTS OF SAR 1990
Duty to pay money into a clients' account
Rule 3(1) Solicitors Account Rules 1990Money is received on behalf of the client, the rules
state that the monies must be deposited into a client
account without delay.
Rule 5 Solicitors Account Rules 1990If solicitors received a cheque for settlement of legal
fees and disbursements,he is required to deposit
such cheque into a client account.
These rules can ensure a degree of formality in the
manner in which the clients ' money is handled and
recorded. It can also enable clients , auditors and Bar
Council to trace the handling of clients ' money
received by solicitors.
DUTY TO KEEP ACCOUNT BOOKS
Keeping proper accounts is the first step in financial
management of a legal firm . Bank statements,
receipts , vouchers and other evidences of
monetary transactions must be properly kept.
Rule 11 (1) and (2) of the Solicitors Account
Rules 1990
The rules require that every solicitor shall at all
time kee p properly written up books and accounts
to show all his dealings with:
i. clients ' money held, received or paid by him;
ii. any other money dealt with by him through a
client account; and
iii. to distinguish such money held , received or
paid by him on account of each separate client and
to distinguish such money from other account held,
received or paid by him on any other account.
The rules also require that solicitor must in every
six months reconcile his client account, bank
statement, receipts , voucher s and clients' journal
to ensure consistency o f the transactions and the
record . The provisions merely provide for the safe
keeping of accounts and ledgers for the purpose of
auditing and did not specify in particular that the
official receipts , vouchers are also considered as
part of record of accounts that must be kept for the
purpose of auditing
