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Instructions to the bank or building society to withdraw money from a client account (rule 23(1)) may be given over the telephone, provided a specific authority has been signed in accordance with this rule before the instructions are given. If a solicitor decides to take advantage of this arrangement, it is of paramount importance that the scheme has appropriate in-built safeguards, such as passwords, to give the greatest protection possible for client money [;BEGIN MATTER DELETED ON 31 MARCH 2009 BY THE SOLICITORS' ACCOUNTS (LEGAL SERVICES ACT) AMENDMENT RULES 2009;]
(or controlled trust money) [;END DELETED MATTER;]. Suitable safeguards will also be needed for practices which operate a CHAPS terminal.
In the case of a withdrawal by cheque, the specific authority (rule 23(1)) is usually a signature on the cheque itself. Signing a blank cheque is not a specific authority.
A withdrawal from a client account by way of a private loan from one client to another can only be made if the provisions of rule 30(2) are complied with.
It is advisable that a withdrawal for payment to or on behalf of a client (or on behalf of a [;BEGIN MATTER DELETED ON 31 MARCH 2009 BY THE SOLICITORS' ACCOUNTS (LEGAL SERVICES ACT) AMENDMENT RULES 2009;]
controlled [;END DELETED MATTER;]trust) be made by way of a crossed cheque whenever possible.
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Controlled [;END DELETED MATTER;] [;BEGIN MATTER INSERTED ON 31 MARCH 2009 BY THE SOLICITORS' ACCOUNTS (LEGAL SERVICES ACT) AMENDMENT RULES 2009;] [;END INSERTED MATTER;]trustees who instruct an outside [;BEGIN MATTER DELETED ON 31 MARCH 2009 BY THE SOLICITORS' ACCOUNTS (LEGAL SERVICES ACT) AMENDMENT RULES 2009;] manager [;END DELETED MATTER;] [;BEGIN MATTER INSERTED ON 31 MARCH 2009 BY THE SOLICITORS' ACCOUNTS (LEGAL SERVICES ACT) AMENDMENT RULES 2009;] [;END INSERTED MATTER;] to run, or continue to run, on a day to day basis, the business or property portfolio of an estate or trust will not need to comply with rule 23(1), provided all cheques are retained in accordance with rule 32(10). (See also rule 32, note (ii)(d).)
Where the sum due to the client is sufficiently large, the solicitor should consider whether it should not appropriately be transferred to the client by direct bank transfer. For doing this, the solicitor would be entitled to make a modest administrative charge in addition to any charge made by the bank in connection with the transfer.
Land Registry application fees paid by direct debit
Solicitors may set up a direct debit system of payment for Land Registry application fees on either the office account or a client account. If a direct debit payment is to be taken from a client account for the payment of Land Registry application fees, the signature of a person, within one of the categories listed in rule 23(1), on the application for registration will constitute the specific authority required by rule 23(1). As with any other payment method, care must be taken to ensure that sufficient uncommitted funds are held in the client account for the particular client before signing the authority. Solicitors should also bear in mind that should the Land Registry take an incorrect amount in error from a firm's client account (for example, a duplicate payment), the firm will be in breach of the rules if other clients' money has been used as a result.
If a solicitor fails to specify the correct Land Registry fee on the application for registration (either by specifying a lesser amount than that actually due, or failing to specify any fee at all), the solicitor will be in breach of rule 23(1) if the Land Registry takes a sum from the solicitor's client account greater than that specified on the application, without a specific authority for the revised sum being in place as required by rule 23. In order that the solicitor can comply with the rules, the Land Registry will need to contact the solicitor before taking the revised amount, so that the necessary authority may be signed prior to the revised amount being taken.
Where the Land Registry contacts the solicitor by telephone, and the solicitor wishes to authorise an immediate payment by direct debit over the telephone, the solicitor will first need to check that there is sufficient money held in client account for the client and, if there is, that it is not committed to some other purpose.
The specific authority required by rule 23(1) can be signed after the telephone call has ended but must be signed before the additional payment (or correct full payment) is taken by the Land Registry. It is advisable to sign the authority promptly and, in any event, on the same day as the telephone instruction is given to the Land Registry to take the additional (or correct full) amount. If the solicitor decides to fund any extra amount from the office account, the transfer of office money to the client account would need to be made, preferably on the same day but, in any event, before the direct debit is taken. The solicitor's internal procedures would need to make it clear to unqualified staff how to deal with such situations; for example, who they should consult before a direct debit for an amount other than that specified on the application can be authorised, and the mechanism for ensuring the new authority is signed by a person within one of the categories listed in rule 23(1).
A solicitor may decide to set up a direct debit system of payment on the office account because, for example, he or she does not wish to allow the Land Registry to have access to the firm's client account. Provided the solicitor is in funds, a transfer from the client account to the office account may be made under rule 22(1)(c) to reimburse the solicitor as soon as the direct debit has been taken.