Lawyers advised to keep client money safe
Amid recent publicized cases of lawyers being sued for monies owed to clients, the umbrella body for accountants is giving attorneys advice to protect themselves, their clients and the integrity of the profession.
The Institute of Chartered Accountants of Barbados (ICAB) today encouraged attorneys to “consider voluntarily allowing an independent audit of their client accounts”.
Vice president Andrew Brathwaite said ICAB was even willing to collaborate with the Barbados Bar Association on developing procedures for voluntary compliance that would bolster public confidence and trust in the ability of providers of legal services to protect the safety of client money.
According to the Bar Association’s Legal Profession Code of Ethics, attorneys are required to keep accounts that clearly and accurately distinguish funds held in trust for clients against the lawyer’s own finances.
However, Brathwaite noted that some members of the legal fraternity or their staff might relax such procedures if there was no external party checking to make sure that this occurred.
“Proper accounting for client money can be complex, especially where there is a large number of clients and client transactions, and errors may occur inadvertently despite the best of intentions. Even where the lawyer has employed qualified accounting staff to supervise record keeping, independent verification may still be advisable,” he said.
“Independent verification may include periodic audit of client accounts, or limited procedures to verify that the recommended accounting systems and controls are in place and operating effectively.”
While the Bar Association notes that a breach of the rules in its Code of Ethics constitutes professional misconduct, Brathwaite pointed to the United Kingdom’s (UK) Solicitors Regulatory Authority Rules as offering a more detailed guide for the protection of client accounts, which he suggested the Bar could consider for the purpose of updating its 1988 Code.
Along with provisions detailing the way that client accounts should be set up, accessed and used, the UK Rules require any attorney who holds client money to provide an accountants report on their finances to the Authority within six months of the end of each year.