Solicitors Accounts — SQE1 practice questions

Ferris & Co acts for Mrs Lowe on two matters. On Monday the firm receives three payments from her: £1,500 'on account of costs' for her new boundary dispute, before any work has been billed; £600 in payment of a bill for her lease renewal which the firm delivered to her last week; and £120 reimbursing a local search fee which the firm paid last month out of its own office account.

Which of the sums received is client money under the SRA Accounts Rules?

1. AAll three sums, because each was received from a client in connection with regulated services.
2. BOnly the £1,500 received on account of costs; the other two sums are office money.
3. CThe £1,500 and the £120 are client money, but the £600 is office money.
4. DOnly the £600, because it relates to a bill that has been delivered.
5. ENone of the sums, because they all relate to the firm's own charges.

Grace, a partner in Thorne Solicitors, is the attorney for her client Mr Ellwood under a registered lasting power of attorney for property and financial affairs. Acting under the power, Grace sells Mr Ellwood's car and receives a cheque for £8,000 payable to Thorne Solicitors. Grace's partners suggest that, because she is acting as attorney rather than as Mr Ellwood's solicitor, the cheque falls outside the SRA Accounts Rules.

How should the £8,000 be treated under the SRA Accounts Rules?

1. AIt is not client money, because Grace is acting personally as attorney and not as a solicitor.
2. BIt is office money, because the firm will charge fees for Grace's work as attorney.
3. CIt is client money only if Mr Ellwood has lost mental capacity.
4. DIt is client money, because it is held in the firm's capacity as the holder of a specified office or appointment such as an attorney, and so is subject to the Rules.
5. EIt should be paid into Grace's personal bank account so that it is kept separate from the firm's money.

Quill Legal Ltd is a small SRA-authorised firm offering fixed-fee employment advice. It does not operate a client account. Before starting work for a new client, Mr Brand, it asks him for £900 as its fixed fee and £300 for a medical expert's report, which the firm has contracted with the expert to obtain and is liable to pay. The firm told Mr Brand in writing, before he paid, that these sums would be held in its business account. The firm never handles any other client money.

Which of the following best describes where Quill Legal may hold the £1,200?

1. AIt may hold the whole £1,200 in its business account, because it holds only fees and disbursements for which it is liable, it has no other reason to have a client account, and it told Mr Brand in advance.
2. BIt must open a client account, because all money received in advance for fees is client money that must be paid into a client account.
3. CIt may hold the money in its business account only if Mr Brand has signed a written agreement consenting to that arrangement.
4. DIt may hold the £900 in its business account, but the £300 for the expert's fee must be paid into a client account.
5. EIt may hold the money in its business account only because the total is below £10,000.