The Law Society of Ireland has announced the introduction of new Solicitors Accounts Regulations 2023. The New Regulations are effective for period ends starting on or after 1 July 2023.
The amendments to the regulations were implemented to include additional protections for client monies and to strengthen the existing regulations, where existing regulations were considered inadequate or not sufficiently clear. The changes will have an impact on the duties for the Practising Solicitors and Reporting Accountants.
A number of the most significant changes are as follows:
- Reporting accountant’s reports are now required to be filed with the Law Society within 5 months of the accounting date, a month earlier than previously.
- Balancing statements are now required at quarterly intervals for client account transactions.
- Compliance partner/sole practitioner are now required to provide specific confirmation to the Law Society, through the Form of Acknowledgement, of compliance with the regulations that:
- each balancing statement has been approved,
- a listing of client ledger balances outstanding two years or more has been prepared and approved and
- review the Client ledger balances for undue or unnecessary delays in discharging Client moneys and where necessary immediate action has been taken to deal with such matters
- and maintaining back up of computerised accounting systems.
- Increased obligation on solicitors to ensure back-ups of computerised information are performed on a timely basis and stored securely off-premises.
- A solicitor must notify the Law Society if they cannot rectify deficits of client funds within seven days of it coming to their attention.
- Responsibility for breach of the regulations extends to the solicitor responsible for the actual breach and not just the principal or partners of the firm.
- Solicitors are required to return client monies when the legal service is completed.
- Cheque Signatories or transaction authorisers on the Client account are to include a Solicitor who is a Partner or a sole Practitioner with a current Practicing certificate.
- Make it clear to clients in writing that Clients’ moneys held by the Solicitor are or will be applied in satisfaction of fees.
- Transfer of funds from client accounts to office accounts are to be related to specific clients.
- A file of documents or record in respect of electronic transfers to be maintained.
- The Law Society may carry out investigations away from the solicitor’s practice.
Some of these additional requirements will create an increased administrative burden on both practicing solicitors, Accounts staff and Reporting Accountants in order to maintain compliance with the new regulations. Practicing solicitors would be well advised to review the new Solicitor Accounts Regulations 2023 in full and implement the required procedures in advance of the new regulations.
The Law Society has made it clear that they will continue to provide guidance in order to comply with the regulations and have acknowledged that the changes may cause alarm for solicitors who view the demands of regulatory compliance as an increased burden.
At RBK, we have a team with extensive experience who can assist when it comes to understanding and implementing the Solicitors Accounts Regulations.