Client money and office money — SQE1 Accounts question
A worked single-best-answer question on client money and office money, with why each wrong option is wrong — the way SQE1 traps candidates.
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?
- AIt is not client money, because Grace is acting personally as attorney and not as a solicitor.
- BIt is office money, because the firm will charge fees for Grace's work as attorney.
- CIt is client money only if Mr Ellwood has lost mental capacity.
- 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.
- EIt should be paid into Grace's personal bank account so that it is kept separate from the firm's money.
Show answer and reasoning
Rule: Money held or received as trustee or as the holder of a specified office or appointment, such as attorney or deputy, is client money.
- A Rule 2.1(c) expressly brings money held as attorney within the definition of client money. (wrong rule)
- B The firm's entitlement to charge for the work does not make money belonging to the donor office money. (wrong rule)
- C Whether money is client money does not depend on the donor's capacity. (wrong rule)
- E Paragraph 4.3 of the Code prohibits solicitors from holding client money personally save in prescribed circumstances. (wrong rule)
Source: SRA Accounts Rules 2019, r 2.1(c); SRA Code of Conduct for Solicitors, RELs and RFLs, para 4.3