Solicitors Accounts (SSA) General Revision Flashcards

Comprehensive vocabulary flashcards covering SRA Accounts Rules, professional principles, specific accounting methods for VAT and conveyancing, and regulatory reporting requirements.

Client Money (Rule $2.1$)

Any money a law firm receives or holds that does not belong to the firm, including money held on behalf of clients or third-parties during legal services, but excluding payments for disbursements already paid.

Business Money

Money belonging to the firm, including profit costs and money received as reimbursement for disbursements already paid by the firm.

Costs

A collective term that covers both fees and disbursements in legal accounting.

General Client Account (GCA)

A bank or building society account where a firm pays most client and third-party money and from which payments are made to progress legal matters.

Separate Designated Deposit Client Account (SDDCA)

An account for a specific client used when money is not needed immediately, designed to attract a higher rate of interest.

Rule $3.2$ (Client Account Labeling)

The requirement that all client accounts must be held at a bank or building society in England and Wales and must be labeled with the firm's name and the word ‘client’.

Rule $2.2$ Exceptions

Circumstances where firms may dispense with a client account, such as when they only receive money for their own fees and unpaid disbursements or if the firm is solely a criminal litigation firm receiving Legal Aid Agency ($LAA$) payments.

Promptly (Rule $2.3$)

The time standard for paying client money into a client account, interpreted as shortly afterwards, typically the same or next working day.

Rule $2.4$ (Available on Demand)

The requirement that client money must be available on demand, meaning firms typically maintain a General Client Account with no notice period for withdrawals.

Rule $2.5$ (Return of Funds)

The mandate to return client money as soon as there is no longer any proper reason to hold it, such as at the conclusion of a conveyancing or probate matter.

Withdrawal from Client Account (Rule $5$)

Permissible only for three reasons: for the purpose the money was held, on instructions from the client/third-party, or with authorization from the $SRA$.

Manager

A person with responsibility for running the firm, such as a partner, member of a law $LLP$, sole principal, or director of a law company.

COFA

Compliance Officer for Finance and Administration; an individual responsible for ensuring compliance with the $SRA$ rules who does not need to be legally qualified.

Rule $7.1$ (Interest)

The requirement for a firm to account to clients or third-parties for a fair sum of interest, based on a written policy regarding the amount and length of time funds are held.

Sum in Lieu of Interest

An amount paid to a client when money is held in a General Client Account, calculated based on the firm's interest policy.

Abatement

An agreed reduction in a client's bill.

Output Tax

$VAT$ charged by a law firm to its customers for legal services supplied.

Input Tax

$VAT$ charged to a law firm by its suppliers for goods and supplies purchased.

$VAT$ Registration Threshold

The turnover level, currently $£85,000$ per year, at which a business must register for $VAT$.

Agency Method

A method for recording disbursements where the client's name is on the third-party invoice; the disbursement is paid as a $VAT$-inclusive sum.

Principal Method

A method for recording disbursements where the firm's name is on the third-party invoice; the disbursement is recorded on the client ledger as a $VAT$-exclusive sum.

Inter-client Transfer

A transfer of money between different clients or between different matters for the same client that does not require cash sheet entries.

Mixed Receipt

A receipt containing both client money and business money that can be paid into either account, provided the other element is promptly transferred.

Mortgage Advance

The funds a lender agrees to lend a buyer to complete a property purchase.

Mortgage Redemption

The act of a seller repaying the lender any remaining money owed on a mortgage following a property sale.

Stakeholder

A status where a deposit is held jointly on behalf of both the buyer and the seller between the exchange of contracts and completion.

Agent (Conveyancing)

A status where a deposit is held by the seller's solicitors on behalf of the seller only, meaning the deposit belongs to the seller from the exchange of contracts.

Bridging Loans

Short-term borrowed funds used to bridge a gap while waiting for other sources of money to become available.

TPMA

Third-Party Managed Account; an alternative to a client account that must be regulated by the $FCA$.

Rule $8.1$ (Accounting Records)

The requirement for firms to maintain accounting records that are accurate, contemporaneous, and chronological.

Reconciliation

The process of cross-checking internal accounting records against bank statements for client and business accounts, required at least every $5$ weeks.

Accountant's Report (Rule $12.1$)

A report that must be obtained within $6$ months of the end of the accounting period by any firm that has held or received client money.

Rule $12.2(b)$ Exception

An exception from obtaining an accountant's report if client account balances average $£10,000$ or less and never exceed $£250,000$ during the period.

Records Retention Period

The length of time, $6$ years, that a firm must securely store all accounting records.

Bolton v Law Society [$1993$] EWCA Civ $32$

Legal case establishing the principle that a solicitor must be trusted to the ends of the earth.