SRA Handbook

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Part 7: Practice asfrom an RELoffice outside England and Wales and from an office in England and Wales of an Exempt European Practice

Rule 47: Purpose of the overseas accounts provisions [Deleted]

Rule 47A: Purpose of rules applying to RELs in Exempt European Practices

1.1

47A.1 The purpose of applying different accounts provisions:

to practice from an office outside England and Wales is to ensure similar protection for client money (overseas) but by way of rules which are more adaptable to conditions in other jurisdictions.

to

the practice of an REL from an office in England and Wales of an Exempt European Practice is to ensure similar protection for client monies but by way of rules which recognise that the body in which the REL is practising is not itself a regulated entityare more adaptable to such practices.

Rule 48: Application and Interpretation

48.1

Part 7 of these rules applies to your practice as an RELfrom an office inoutside England and Wales to the extent specified in each rule in this Part. If compliance with any applicable provision of an Exempt European PracticePart 7 of these rules would result in your breaching local law, you may disregard that provision to the extent necessary to comply with that local law.

48.2

The SRA Handbook Glossary 2012 shall apply and, unless the context otherwise requires:

(a)

all italicised terms shall be defined; and

(b)

all terms shall be interpreted,

in accordance with the Glossary.

Rule 49: Interest [Deleted]

Rule 50: Accounts [Deleted]

Rule 50A: Client money

1.1

50A.1 You Part 7 of these rules applies to the practice of an REL from an office in England and Wales of an Exempt European Practice but for this purpose only all references in these rules to client monies (overseas) shall be substituted with client monies.

Guidance note

(i)

If you are an REL practising from an office in England and Wales of an Exempt European Practice and you hold or receive client money you must comply with this Partrules 49.2 and 49.3, 50.3 to 50.6 and 51.

Interest

1.1

You must comply with rule 49.2 below, if you hold client money (overseas) and you are:

a solicitorsole practitionerpractising from an office outside England and Wales, or an RELsole practitionerpractising from an office in Scotland or Northern Ireland;

a lawyer-controlled body or (in relation to practice from an office in Scotland or Northern Ireland) a lawyer-controlled body, or an REL-controlled body;

a lawyer of England and Wales who is a manager (overseas) of a firm (overseas) which is practising from an office outside the UK, and lawyers of England and Wales control the firm (overseas), either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners; or

a lawyer of England and Wales or REL who is a manager (overseas) of a firm (overseas) which is practising from an office in Scotland or Northern Ireland, and lawyers of England and Wales and/or RELs control the firm (overseas), either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners.

If it is fair and reasonable for interest to be earned for the client on that client money (overseas), you must ensure that:

the client money (overseas) is dealt with so that fair and reasonable interest is earned upon it, and that the interest is paid to the client;

(a)

the client is paid a sum equivalent to the interest that would have been earned if the client money (overseas) had earned fair and reasonable interest; or

any alternative written agreement with the client setting out arrangements regarding the payment of interest on that money is carried out.

In deciding whether it is fair and reasonable for interest to be earned for a client on client money (overseas), you must have regard to all the circumstances, including:

the amount of the money;

the length of time for which you are likely to hold the money; and

the law and prevailing custom of lawyers practising in the jurisdiction in which you are practising.

Accounts

Practice from an office outside the UK

You must comply with rule 50.3 and 50.4 below in relation to practice from an office outside the UK if you are:

a

solicitorsole practitioner who has held or received client money. (overseas);

(a)

50A.2 a lawyer-controlled body which has held or received client money (overseas) as a firm (overseas);

a lawyer of England and Wales, or a non-lawyer, who is a manager (overseas) of a lawyer-controlled body which holds or receives client money (overseas);

a lawyer of England and Wales who is a manager (overseas) of any other firm (overseas) which is controlled by lawyers of England and Wales, either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners, if the firm (overseas) holds or receives client money (overseas);

a solicitor who holds or receives client money (overseas) as a named trustee;

a lawyer of England and Wales, or a non-lawyer, who is a manager (overseas) of a lawyer-controlled body and who holds or receives client money (overseas) as a named trustee.

Practice from an office in Scotland or Northern Ireland

You must comply with rule 50.3 and 50.4 below in relation to practice from an office in Scotland or Northern Ireland if you are:

a solicitor or RELsole practitioner who has held or received client money (overseas);

a lawyer-controlled body, or an REL-controlled body, which has held or received client money (overseas) as a firm (overseas);

a lawyer of England and Wales, an REL, a European lawyer registered with the BSB or a non-lawyer, who is a manager (overseas) of a lawyer-controlled body, or an REL-controlled body, which holds or receives client money (overseas);

a lawyer of England and Wales or REL who is a manager (overseas) of any other firm (overseas) which is controlled by lawyers of England and Wales and/or RELs, either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners, if the firm (overseas) holds or receives client money (overseas);

a solicitor or REL who holds or receives client money (overseas) as a named trustee;

a lawyer of England and Wales, a European lawyer registered with the BSB or a non-lawyer, who is a manager (overseas) of a lawyer-controlled body, or an REL-controlled body, and who holds or receives client money (overseas) as a named trustee.

Dealings with client money

In

all dealings with client money, (overseas), you must: ensure that:

(a)

keep it is kept in a client moneyaccount (overseas), separate from money which is not client money; (overseas);

(b)

on receipt, pay client moneyit is paid without delay into a client account without undue delay(overseas) and keep itkept there, unless the client has expressly or by implication agreed that the money shall be dealt with otherwise, or you pay it is paid directlystraight over to a third party in the execution of a trust under which it is held;

(c)

ensure by use of proper accounting systems and processes that client money is used for client's matters only and for the purposes for which it has been paid;

(d)

use money held as trustee of a trust for the purposes of that trust only;

(a)

establish and maintain proper accounting systems and proper internal controls over those systems to ensure compliance it is not paid or withdrawn from a client account (overseas) except:

on the specific authority of the client;

where the payment or withdrawal is properly required:

for a payment to or on behalf of the client;

for or towards payment of a debt due to the firm (overseas) from the client or in reimbursement of money expended by the firm (overseas) on behalf of the client; or

for or towards payment of costs due to the firm (overseas) from the client, provided that a bill of costs or other written intimation of the amount of the costs incurred has been delivered to the client and it has thereby (or otherwise in writing) been made clear to the client that the money held will be applied in payment of the costs due; or

in proper execution of a trust under which it is held;

accounts are kept at all times, whether by written, electronic, mechanical or other means, to:

(e)

record all dealings with these rules;

(f)

return client money to the person on whose behalf the money is held promptly, as soon as there is no longer(overseas) in any proper reason to retain those funds;client account (overseas);

(i)

keep accounting records to show accurately the position with regard to the money held for all client money (overseas) received, held or paid, distinct from any other money, and separately in respect of each client or trust; and

(i)

ensure that the firm (overseas) is able at all times to account, without delay, to each and every client or trust for a minimum period of all money received, held or paid on behalf of that client or trust; and

(g)

all accounts, books, ledgers and records kept in relation to the firm's (overseas)client account(s) (overseas) are preserved for at least six years; from the date of the last entry therein.

(h)

Account for interest on client money in accordance with rule 22.

Rule 50B: Accountants' Reports

50B.1 Accountants' reports

You

must obtaindeliver an accountant'saccountant's report in respect of any period during which you or the Exempt European Practice from which you practiceyour firm (overseas) have held or received client money unless you fall(overseas) and you were subject to rule 50.3 above, within anysix months of the exceptions contained in rule 32A.1Aend of that period.

50B.2

You must comply with the rules in Part 6 in relation to any accountant's report that you are required to obtain under rule 50B.1.

The accountant's report must be signed by the reporting accountant, who must be an accountant qualified in England and Wales or in the overseas jurisdiction where your office is based, or by such other person as the SRA may think fit. The SRA may for reasonable cause disqualify a person from signing accountants' reports.

The accountant's report must be based on a sufficient examination of the relevant documents to give the reporting accountant a reasonable indication whether or not you have complied with rule 50.3 above during the period covered by the report, and must include the following:

your name, practising address(es) and practising style and the name(s) of the firm's (overseas)managers (overseas);

the name, address and qualification of the reporting accountant;

an indication of the nature and extent of the examination the reporting accountant has made of the relevant documents;

a statement of the total amount of money held at banks or similar institutions on behalf of clients and trusts, and of the total liabilities to clients and trusts, on any date selected by the reporting accountant (including the last day), falling within the period under review; and an explanation of any difference between the total amount of money held for clients and trusts and the total liabilities to clients and trusts;

if the reporting accountant is satisfied that (so far as may be ascertained from the examination) you have complied with rule 50.3 above during the period covered by the report, except for trivial breaches, or situations where you have been bound by a local rule not to comply, a statement to that effect; and

if the reporting accountant is not sufficiently satisfied to give a statement under (e) above, details of any matters in respect of which it appears to the reporting accountant that you have not complied with rule 50.3 above.

Rule 51: Production of documents, information and explanations

51.1

You must promptly comply with:

(a)

a written notice from the SRA that you must produce for inspection by the appointee of the SRA all documents held by you or held under your control and all information and explanations requested:

(i)

in connection with your practice; or

(ii)

in connection with any trust of which you are, or formerly were, a trustee;

for the purpose of ascertaining whether any person subject to Part 7 of these rules is complying with or has complied with any provision of this Part of these rules, or on whether the account has been used for or in connection with a breach of any of the Principles or other SRA Handbook requirements made or issued by the SRA; and

(b)

a notice given by the SRA in accordance with section 44B or 44BA of the SALSA or section 93 of the LSA for the provision of documents, information or explanations.

51.2

You must provide any necessary permissions for information to be given so as to enable the appointee of the SRA to:

(a)

prepare a report on the documents produced under rule 51.1 above; and

(b)

seek verification from clients, staff and the banks, building societies or other financial institutions used by you.

51.3

You must comply with all requests from the SRA or its appointee as to:

(a)

the form in which you produce any documents you hold electronically; and

(b)

photocopies of any documents to take away.

51.4

A notice under this rule is deemed to be duly served:

(a)

on the date on which it is delivered to or left at your address;

(b)

on the date on which it is sent electronically to your e-mail or fax address; or

(c)

48 hours (excluding Saturdays, Sundays and Bank Holidays) after it has been sent by post or document exchange to your last notified practising address.

Guidance notes

If your firm has offices in and outside England and Wales, a single accountant's report may be submitted covering your practice from offices both in, and outside, England and Wales - such a report must cover compliance both with Parts 1 to 6 of these rules, and with Part 7 of these rules.

The accounting requirements and the obligation to deliver an accountant's report in this part of the rules are designed to apply to you in relation to money held or received by your firm unless it is primarily the practice of lawyers of other jurisdictions. The fact that they do not apply in certain cases is not intended to allow a lower standard of care in the handling of client money - simply to prevent the "domestic provisions" applying "by the back door" in a disproportionate or inappropriate way.

In deciding whether interest ought, in fairness, to be paid to a client, the fact that the interest is or would be negligible, or it is customary in that jurisdiction to deal with interest in a different way, may mean that interest is not payable under rule 49.2.

Rule 52: Waivers

52.1

The SRA may waive in writing in any particular case or cases any of the provisions of Part 7 of the rules, may place conditions on, and may revoke, any waiver.

Guidance note

(i)

Applications for waivers should be made to the Professional Ethics Guidance Team. You will need to show that your circumstances are exceptional in order for a waiver to be granted.