Changes to Solicitors' Accounts Rules 1998 – Proper Accounting Treatment of Regular Payments from the LSC.

On 17 th March 2004 a new rule 21(2) of the Solicitors' Accounts Rules 1998 (SAR) was made. The new rule should have been implemented by 1 May 2005.

Regular payments are:
® standard monthly payments under the Legal Services Commission (LSC) civil contracting scheme
® monthly payments under the LSC criminal contracting scheme
® any similar payments made by the LSC on a regular basis

Use of office account:
Regular payments are office money and rule 21(2)(b) SAR requires them to be paid into, and held in, an office account at a bank or building society (as defined at rule 2(2)(c) and (d) SAR.

Payments for certified work continue to be governed by rule 21(1) SAR. Rule 21(1) SAR permits, but does not require, payments from the LSC in respect of certified work to be paid into an office account.

The LSC requires all payments transmitted through the BACS system to be made to a single bank account. This is because they are unable to send certificated payments to one account, and regular payments to another account.

From 1 May 2005, solicitors recieiving certificated payments by BACS will therefore have to arrange for both sets of payment to be made to the office accounts in order to comply with rule 21(2)(b) SAR in relation to regular payments.

In practice, however, it is likely that most legal aid firms already revive certificated payments into office accounts under the dispensation in rule 21(1) SAR for cash flow reasons.

In light of this DPS are making the necessary arrangements in Cashier to cope with the new rule.

If you have a query about this matter please contact DPS Software on 020 8804 1002 or email info@dpssoftware.co.uk