Solicitors Client Account funds - safe or not?

drum_3

Hi

First post here so apologies if in the wrong forum.

One for all you legal eagles.

I and my family have some substantial funds sitting in my late father's solicitors Client Account awaiting dispersal to us from his estate.

Might sound paranoid but hey, these are strange times so what would happen to that account it was held with a bank that became insolvent?

Would there be any protection at all for those Client Account funds?

Would each client be treated as individual account holders or would the funds simply disappear?

Hope someone can help.

Thanks

MX5huggy

Can you not get the dispersal started you don't have to wait for all the funds to come in.

I got 3 amounts over 2 years from an estate.

drum_3

MX5huggy wrote: »

Can you not get the dispersal started you don't have to wait for all the funds to come in.

I got 3 amounts over 2 years from an estate.

Thank you MX5huggy

I think it's all in and we've signed the paperwork. Just waiting for the cheque.

Curious as to the status of the Client Account fund. Must be hundreds of them out there, all with a lot of client money in them. Surely they've got more protection than £50k if the bank with which the account is based went belly-up

tyllwyd

I think the solicitors have to treat the money in the accounts as the clients not their own - but I would really doubt if that makes any difference to the status of the account as far as the bank was concerned. I'd have guessed that the bank would regard the account as belonging to the firm of solicitors, they wouldn't have any idea who the money in that account belonged to (and it would be constantly changing in any case). I tried googling it, and came across some comment about business bank accounts having the £50000 protection if they were smaller businesses, but not necessarily for larger ones, so that makes me wonder if all the client accounts out there would be covered even up to that amount.

drum_3

tyllwyd wrote: »

I think the solicitors have to treat the money in the accounts as the clients not their own - but I would really doubt if that makes any difference to the status of the account as far as the bank was concerned. I'd have guessed that the bank would regard the account as belonging to the firm of solicitors, they wouldn't have any idea who the money in that account belonged to (and it would be constantly changing in any case). I tried googling it, and came across some comment about business bank accounts having the £50000 protection if they were smaller businesses, but not necessarily for larger ones, so that makes me wonder if all the client accounts out there would be covered even up to that amount.

Thanks tyllwyd

Your answer is kind of what I was expecting.

I've actually posed the question to the firm who responded that is was a perfectly fair question.

The answer is, there is no guarantee at all. Imagine the impact that could have if the worst came to the worse.

jimence

This looks like the answer:

http://www.lawgazette.co.uk/news/market-chaos-sparks-client-money-fears

I.e. no protection! So perhaps worrying for some.

drum_3

jimence wrote: »

This looks like the answer:

http://www.lawgazette.co.uk/news/market-chaos-sparks-client-money-fears

I.e. no protection! So perhaps worrying for some.

Nice find jimence.

That last line though seems to contradict the rest of the article or have I misunderstood?

The FSCS said as long as the solicitor had informed their bank that they were depositing money from multiple clients into a single account, each client would benefit from the maximum £35,000 protection.

drum_3

More news from same source today.

http://www.lawgazette.co.uk/news/banks-silent-over-client-money

Seems like a bit of a hot potato!

tyllwyd

drum wrote: »

Nice find jimence.

That last line though seems to contradict the rest of the article or have I misunderstood?

I agree - I read the article twice and was still confused! Sounds like no-one has even considered the possibility and they are all confused! I'm a legal editor, and I've worked on a couple of books for solicitors about their duties etc including client accounts and I have never seen anything mentioned about this situation.

jimence

i think it means that each client is protected up to £35k (although i think that would now be 50k) IF the solicitor has told the bank that all the money pooled in one account actually belonged to separate people. If not, then the solicitor would receive the 35k (50k) if the bank went down - which he'd have to share among everyone!

A thoroughly ridiculous situation!!

drum_3

tyllwyd wrote: »

I agree - I read the article twice and was still confused! Sounds like no-one has even considered the possibility and they are all confused! I'm a legal editor, and I've worked on a couple of books for solicitors about their duties etc including client accounts and I have never seen anything mentioned about this situation.

Hi tyllwyd

Had chance to read the article in Post 8 yet?

That seems to explain my earlier quoted line, but heck this is preposterous if both the banking profession and the legal profession are not sure of their position.

I know these are strange times but surely someone running some of these massive law firms must had the thought cross their mind at some point before all this arose?

If me 'joe public' can have it flit across my limited intellect then I'm staggered that contingency plans have never seemingly been previously considered for this eventuality.