Lecture On The Legal Profession (Solicitors’ Accounts) Rules As Amended By The Legal Profession

(Solicitors’ Accounts) (Amendments) Rules 2004 & Other Rules

EXAMINABLE!!!!

1. Introduction
2. Object of Rules
3. Responsibility

a. Legal Profession (Solicitors’ Accounts) Rules

- Definitions
- Client’s Money - Stakeholder Money
- Client’s Account
- Payments into Client’s Account
- A solicitor cannot be his own client (Rule 6) - See Re H E Cashin, an Advocate and Solicitor [1998] 1
MLJ 380
- Voluntary and other payments into client’s account
- Withdrawal from client’s account (Rule 7)
- Money from client’s account - how drawn
- Client’s money withheld from client’s account (Rule 9)
- Cash, books, ledgers, journals & accounts (Rule 11)
- Reconciliation Statement
- Rules 11(6), 11(7) & 11(8)
- Employment of book-keeper (Rule 11A)
- Safeguards
- Powers of the Law Society (Rule 12)
- Rule 16

b. Accountants’ Report Rules

- Delivery of Accountants’ Report
- Solicitor/Client Privilege
- Waiver in writing by Council of the Law Society

c. Legal Profession (Deposit Interest) Rules (Rules 2 & 3)

d. Income Tax Act - See 67(1)(B) [Issuing of Receipts]
e. Imposition of conditions while Practising Certificate in force - Section 27A of the Legal Profession Act
(see Law Society of Singapore v Lim Yee Kai [1999] 1 SLR 336)
f. Cancellation of Practising Certificates - Section 28 of the Legal Profession Act
g. Disciplinary Proceedings - Section 83(2)j of the Legal Profession Act
h. The Law Society’s Recommendations
i. Anti-Money Laundering

Read pages 120 to 127 and pages 195 to 198 of the Professional Responsibility Manual 2006.

General Principles
- Note – P to P costs belong to client, not to firm! Cannot put in own acct – breach of rules 3
- Discip committee held in Cashin that all partners subj to discip proceedings. One of partners away on
holiday, not in firm.
- Myers case – difference between civil resp and discip resp – latter essentially punitive. Civil resp – only
imposed if there is personal complicity on part of solicitors concerned. If not, canot inflict personal resp on
him.
- (P to P) if a solicitor successfully concludes a case in court and recovers costs from the other side, they are
termed “party and party” costs
- not a complete indemnity to the successful litigant, but goes towards indemnifying some of the costs which
he ultimately would have to pay to his solicitor
- such costs will be paid by the defendant to the plaintiff as “party and party” costs
- solicitors often think that “party and party” costs belong to them an pay it into their office account
- Inquiry Committee was quite staggered to find that the solicitor, who had been in practice for some time,
had not appreciated that “party and party” costs are paid to the client to indemnify him partially for the costs
that he has incurred in bringing the case against the defendant
- It is not something which the solicitor can pocket: Re Cashin Howard [1989] 3 MLJ 129 (first few pages got
this case)
- (out court settn) Money paid pursuant to an out-of-court settlement or judgment is usually paid to the
solicitor of the successful party
- Solicitors’ Account Rules do not allow the solicitor to take such money out from the client account for his
own use without drawing a bill

Exceptions to rules:
- Rules x apply to trust acct because sep rules that apply to this
- Specific instructions – eg instructed by client to invest money (in writing – acknowledge instructions!) his
instructions supersede the rules

- Present legislation governing solicitors in relation to keeping of accounts:

 Legal Profession (Solicitors’ Accounts) Rules
 Legal Profession (Accountant’s Report) Rules
 Legal Profession (Professional Conduct) Rules 1998

Legal Profession Act, s. 83(2)(j) empowers the Council or the Disciplinary Committee to impose sanctions on
solicitors for breaches of the Rules

NB: The Rules in these notes refer to the Legal Profession (Solicitors’ Accounts) Rules, unless otherwise stated.

1. OBJECT OF THE RULES

- ♦ the fair treatment of client’s money.
- ♦ to maintain adequate book-keeping and recording systems.
- ♦ to avoid any confusion of client’s money with the solicitor’s own money.
The object of the rules is to ensure -

2. RESPONSIBILITY
Is civil responsibility synonymous with a disciplinary responsibility?
 Civil responsibility is not similar to disciplinary responsibility – involves an element of neglect, which
cannot be equated with civil responsibility

In a partnership, the responsibility for maintaining a proper book-keeping system is shared by all partners
(including salaried partners).

See Re Howard E Cashin [1989] 3 MLJ at page 129:

C’s firm paid P&P costs into office account – Blame attributed to C – At the time of payment, C was not in
Singapore and had nothing to do with the payment
Held: Disciplinary Committee (in concluding that there was joint responsibility for the payment) failed to
distinguish between civil & disciplinary responsibility
1. Disciplinary power is punitive and penal and is exercised in appropriate cases only where there is personal
complicity by the solicitor charged – negligence may amount to professional misconduct ‘if it is inexcusable
and is such as to be regarded as deplorable by his fellows in the profession
2. There must be an element of personal neglect or misdoing on the part of the solicitor charged
3. Here, no finding that C was personally implicated in the breach of the rules. No evidential basis –
Acquitted

- “In arriving at this conclusion, the Disciplinary Committee failed to distinguish between ‘joint and
several responsibility’, a civil responsibility, on the one hand; and a disciplinary responsibility, on the
other. The confusion appears to have arisen because of the failure to appreciate that the exercise of the
disciplinary power is essentially punitive and penal and is exercised in appropriate case only where
 there is personal complicity by the solicitor charged. It is apposite, in this connection, to quote the
words of Lord Atkin in Myers v Elman at p 302:

‘Misconduct of course may be such as to indicate personal turpitude on the part of the person committing it
and to lead to the conclusion that the party committing it, if an officer of the court, is no longer fit to act as
such. Over conduct such as that, punitive jurisdiction will be exercised, but it seems hardly necessary to
state that no punishment based on personal misconduct will be inflicted unless the party visited is himself
proved to be personally implicated. (Emphasis added).’

- It is true that in certain appropriate circumstances, the negligence of the solicitor in relation to a client
account (e.g. failure to exercise adequate supervision) may amount to professional misconduct, ‘if it is
inexcusable and is such as to be regarded as deplorable by his fellows in the profession’: per Lord Denning
in Re A Solicitor at p 815. But no one would dispute - and it has not been suggested otherwise - that such
cases involve an element of personal neglect or misdoing on the part of the solicitor charged.”

The position of a partner guilty of non-compliance with the accounts rules but without dishonesty, would depend
on all the circumstances of the case

Law Society of Singapore v Prem Singh [1999] 4 SLR 157

Respondent failed to pay into a client’s account a sum of $3500.00 and $18000.00 received from his client –
breach Rule 3 Legal Profession (Solicitors’ Accounts) Rules
Held:
(1) Penalty imposed in the case should reaffirm the importance of protection of the public and maintaining
public confidence in the manner in which client’s money is to be handled and safeguarded by members of
the legal profession.
(2) Appropriate that a message be sent out to clarify that a breach of Rule 3 is a serious disciplinary offence.
(3) But, as the charges framed against the respondent did not involved any dishonesty or lack of probity, he
was suspended from practice for 2 years.

3. CLIENT ACCOUNT
- “Client account” means a current or deposit account in the name of the solicitor at a bank or an approved
finance company in the title of which account the word “client” appears.
- ♦Why the word “client”?
o It is essential that all client accounts are designated in this way to avoid, in the event of the
bankruptcy or death of a sole practitioner, any difficulty which might arise as to the identity of
client’s money.
- Important that that word appears to avoid difficulties arising in events of death (of sole practitioner) or
bankruptcy
- Where money is held jointly with another firm of solicitors, not client’s money – since held by 2 firms.
Thus, not essential to put into client’s account – But may be required to be recorded in a memorandum form
noting “stakeholders money, held jointly”, no sole control from either firm
- Cannot use client’s account to purchase property – Use office account is ok
- Even if relationship is solicitor and his wife, must use client’s account
- Where not yet partner ie. employee, use client’s account, not office account

4. CLIENT’S MONEY
- “Client’s money” means money held or received by a solicitor on account of a person for whom he is acting
in relation to the holding or receipt of such money either as a solicitor, or in connection with his practice as a
solicitor, as agent, bailee, stakeholder or in any other capacity, but does not include -
- Rule 2 specifically enacts that client’s money does not include:
(1) money held or received by a solicitor-trustee on account of the trustees of a trust; or
(2) money to which the only person entitled is the solicitor himself or in the case of a firm of solicitors,
one or more of the partners in the firm
- It should be appreciated that specific instructions from a client (in writing or acknowledged by the solicitor
in writing) take precedence over the rules in relation to money received on the client’s behalf (see Rule
9(2)(a)).
STAKEHOLDER MONEY - IS THERE ANY DIFFERENCE?
- Stakeholders money is clients’ money unless it is placed on an account operated jointly by two firms of
solicitors. Money on a joint account is not clients’ money and since it is not the sole control of either
solicitor does not fall within the ambit of the Rules.
- However, it is preferable for such money to be separately recorded in “memorandum” form in the books of
account of each solicitor.

RULE 6
- - A solicitor cannot treat himself or herself as a client. This would be a breach of Rule 6.
- In consequence, a principal’s personal or office transactions cannot be conducted through client account and
it is a breach of the rules for a principal’s personal conveyancing transactions to be conducted through client
account. What about a solicitor and his wife?

In H.E. Cashin (an Advocate & Solicitor) [1988] 1 MLJ at page 380 :
C borrowed money and put into client’s account, not office account – Breach Rule 6 (see above)
Held: (Wee Chong Jin CJ)
- No admission by or on behalf of respondent of wilful disregard to the rules
- Ignorance is not an excuse
- Important to distinguish between ‘actual’ and ‘constructive’ knowledge – affects seriousness of
contravention and type of penalty to be imposed
 a principal’s personal or office transactions cannot be conducted through a client’s account
 it is a breach of the rules for a principal’s personal conveyancing transactions to be conducted through a
client’s account
 “There was no admission by or on behalf of the respondent that he had wilfully disregarded the
provisions of that rule. Ignorance of the law is no excuse, but that does not make every breach of the law
a wilful one. What a person knows and what he ought to know are quite different matters. While every
practising solicitor ought to know of the requirements of rule 6, the distinction between actual
knowledge and constructive knowledge must be clearly appreciated, as it would affect the seriousness of
the contravention and hence the kind of penalty that ought to be imposed.
 It is incumbent upon all practising advocates and solicitors to keep themselves apprised of the provisions
of the Act and Rules made thereunder, particularly those provisions and rules which govern the practice
of the profession.”

No money other than money under rules 3, 4 and 5 to be paid into client account
6. --(1) No money, other than money under rules 3, 4 and 5 which a solicitor is required or permitted to pay into a
client account, shall be paid into a client account.
(2) It shall be the duty of a solicitor into whose client account any money has been paid in contravention of this
rule to withdraw the money without the delay on discovery.

See Howard E Cashin [1998] 3 MLJ 129

Cashin - Facts:
The respondent was an advocate and solicitor of the Supreme Court and a senior partner of the law firm of
Murphy and Dunbar. In the present proceedings, an order nisi was made to discipline him under s 80 of the Legal
Profession Act (Cap 161) (the Act) and he was ordered to show cause why he should not be dealt with
accordingly. The facts as far as they were undisputed were as follows. The complainant instructed the respondent
to act for a company (the company) of which the complainant was, at all material times, a director and principal
shareholder. The respondent was instructed to resist a winding-up petition (the petition) that had been presented
against the company. The respondent accepted the instructions and assigned a legal assistant in the firm to assist
him in the matter. The petition against the company was dismissed. Later, the taxed party and party costs which
were awarded to the complainant were paid by the respondent`s law firm into the office account.
The events that followed the dismissal of the petition were acutely in dispute. The complainant claimed that the
respondent had agreed to limit the costs payable by her to $25,000 to the respondent`s law firm. The respondent
denied that he had agreed to this and claimed that the agreement was that such costs would only be limited if the
petitioner (of the winding-up petition) was unable to bear the party and party costs awarded against it. After that,
the complainant wrote a letter, enclosing correspondence between herself and the respondent`s law firm, to the
Law Society describing the events that had occurred and sought the help of the Society in resolving their dispute.
Disciplinary proceedings against the respondent were started. He was charged with breach of r 3 of the
Solicitors` Accounts Rules 1967 by paying client`s money into the office account, breach of s 109(1) of the Act
in that he taxed party and party costs in excess of the agreed solicitor and client costs, and the wrongful
appropriation of party and party costs which lawfully belonged to the complainant. The Disciplinary Committee
(the Committee) hearing the matter determined that cause of sufficient gravity existed against the respondent in
respect of all three charges. The Committee concluded that although the complainant`s letter to the Law Society
did not expressly allege misconduct by the respondent, due allowance should be made for the fact that it was
written by a lay person. There was thus a complaint under s 82(1) of the Act. The Committee also decided that
each partner in the respondent`s law firm had a joint responsibility to ensure that there was no breach of the
Solicitors` Accounts Rules. As regards the second charge, the Committee found that the complainant was a more
credible witness than the respondent, and found the respondent guilty of the charge. In relation to the third
charge, the Committee decided that the party and party costs which were appropriated to the office account wer e
undoubtedly in accordance with normal book-keeping practice, taken as profit for the year which was
distributable as profit among the partners of the firm, and there was no evidence from an accountant or auditor to
prove the contrary.

Holdings:
Held discharging the order nisi to show cause:
(1).A `complaint` meant an accusation of misconduct. A complaint that concerned a civil dispute simpliciter,
unaccompanied by any allegation of misconduct, did not constitute a `complaint of the conduct` within s 82(1) of
the Act.
(2).In the complainant`s letter to the Law Society, she made no allegation of impropriety or misconduct on the
part of the respondent. The letter merely sought guidance and help in the dispute with the respondent`s law firm.
Since the letter made reference to and enclosed an exchange of correspondence between the complainant and the
respondent`s law firm, it was necessary to examine these in some detail to see whether or not they contained any
allegation of misconduct against the respondent personally.
(3).The letters showed that there was a dispute between the complainant and the respondent`s law firm as to the
precise terms of the agreement that they had entered into regarding costs. There was no suggestion that the
respondent had ever intended to deprive the complainant of anything that might be due to her.
(4).This was a dispute which should be resolved in a civil court. A breach of contract simpliciter could not in any
way constitute an allegation of misconduct.
(5).The Committee hearing the matter took the approach that the complainant could not be expected to put her
allegations in legal language or to refer to the provisions of the Act. This, however, ignored the fact that the
complainant`s letter of complaint was drafted with the assistance of another advocate and solicitor. The
conclusion of the Committee was thus against the weight of evidence, and without foundation. There was
therefore no valid `complaint` against the respondent and the proceedings failed at the outset.
(6).The first charge against the respondent was a charge of a personal character, and related strictly to the conduct
of the respondent himself. It was agreed that at the time of the payment of the money into the office account, the
respondent was not in Singapore and had nothing to do with the payment.
(7).The Committee`s conclusion that there was joint responsibility for the payment failed to distinguish between
`joint and several responsibility`, a civil responsibility, on the one hand and a disciplinary responsibility on the
other. The exercise of disciplinary power was essentially punitive and penal and was exercised in appropriate
cases only where there was personal complicity by the solicitor charged. In certain cases, the negligence of a
solicitor in relation to a client account could amount to professional misconduct, `if it is inexcusable and is such
as to be regarded as deplorable by his fellows in the profession`.
(8).In the present case, the Committee made no finding that the respondent was personally implicated in the
breach of the rules, and there was no evidential basis for such a finding. The first charge therefore failed.
(9).As regards the second charge, in deciding whether the Committee came to the correct finding that there was
an oral agreement between the respondent`s law firm and the complainant limiting solicitor and client costs to
$25,000, the whole of the evidence had to be examined to see if the evidence pointed to equal probability of an
agreement which was as the respondent claimed in his defence.
(10).The Committee`s findings were essentially matters of fact, but where it appeared from the evidence that the
wrong decision in fact has been reached, it could be reversed, due regard being had to the court`s disadvantage in
not seeing or hearing the witnesses.
(11).There was no dispute that there was an agreement respecting costs, the dispute relating solely to the terms of
the agreement. It was necessary to test the assessment of the Committee, on an objective litmus test, by reference
to a number of specific issues.
(12).The findings of the Committee on the second charge could not be sustained. Because of this decision, it was
unnecessary for the court to deal with the alternative submission.
(13).In a fundamental sense, the third charge was contingent upon the first charge. Since the respondent was not
personally implicated in the first charge, the person responsible for the appropriation under the second charge
was not the respondent. The Committee failed to appreciate that they had no basis for their inference. In the
absence of evidence from the firm`s accountant or a public accountant, it was not a matter on which the
Committee could properly infer that the appropriated money would, in any event, have been appropriated at a
later date by the respondent and his partners. The onus of proof lay throughout on the Law Society to prove that
wrongful appropriation took place. This onus was not discharged.

5. PAYMENTS INTO CLIENT ACCOUNT (RULE 3)

Client accounts
3.
(1) Subject to rule 9, every solicitor who holds or receives client’s money, or money which under rule 4 he is
permitted and elects to pay into a client account, shall without delay pay such money into a client account.
(2) Any solicitor may keep one client account or as many such accounts as he thinks fit.

- Rule 3 of the Solicitors’ Accounts Rules provides that subject to certain exceptions, every solicitor who
receives client’s money must pay it into a client account without delay, which in normal circumstances
means either the day of receipt or on the next working day. There is no objection to a solicitor keeping as
many client accounts as he or she thinks fit.

- Specific instructions from client in writing or acknowledged by Solicitor in writing take precedence over
rules in relation to money received on client’s behalf (Rule 9 (2)(a))

Where solicitor under no obligation to pay client’s money into client account
9.
(2) Notwithstanding the provisions of these Rules, a solicitor shall not pay into a client account, money held or
received by him --
(a) which the client for his own convenience requests the solicitor in writing to withhold from such account;

- “Solicitor” is defined to include a law corporation and a Joint Law Venture (Rule 2)
2.
"solicitor" means an advocate and solicitor of the Supreme Court and includes a firm of solicitors, a law
corporation and a Joint Law Venture;
- Thus, if a solicitor is acting in person for a conveyancing transaction, then if any money is to be received on
the solicitor’s behalf, he cannot deposit the same into his client’s account – Breach Rule 2, otherwise
- It instills public confidence

‘P&P’ and ‘S&C’ costs:

 ‘P&P’ costs are not complete indemnity to the successful litigant for his costs, but goes towards
indemnifying some of the costs which he ultimately would have to pay his solicitor.
 ‘P&P’ costs are paid to the client to indemnify him partially for the costs that he has incurred in bringing the
case against the defendant
 Eg. Where solicitor settles and industrial claim on behalf of client, for injuries, he may also include as part
of the settlement some amount for costs – such costs will be paid by D  P as ‘P&P’ costs into the client’s
account, Not the office account.
 Howard E Cashim [1989] 3 MLJ 129

6. VOLUNTARY AND OTHER PAYMENTS INTO CLIENT ACCOUNT (RULE 4)

Moneys to be paid into client account

4. There may be paid into a client account --
(a) trust money;
(b) such money belonging to the solicitor as may be necessary for the purpose of opening or maintaining the
account;
 (c) money to replace any sum which for any reason may have been drawn from the account in contravention of
rule 8 (2); and
(d) money received by the solicitor, which under rule 5 he is entitled to split but which he does not split.

- The Solicitors’ Accounts Rules provide that certain items of non-client money may be paid into client
account.
- These items consist of:
a) trust money (Solicitor-trustee);
b) money belonging to the solicitor placed in the client account in order to open or maintain the account;
c) money paid into client account to replace any sum which has been withdrawn from the account in
contravention of the Accounts Rules;
d) Money received by a solicitor which consists of both client’s money and non-client money.

7. WITHDRAWAL FROM CLIENT ACCOUNT (RULE 7)

- Rule 7 of the Solicitors’ Accounts Rules deals with the circumstances where a solicitor may withdraw
client’s money from client account.
- Authority to withdraw – solicitor must be holding a current practising certificate (Rule 11(7))
11.
(7) Unless authorised in writing by the Council, no money may be withdrawn from a bank account or a deposit
account with an approved finance company, being or forming part of a client account, otherwise than under the
signature of a solicitor who holds a current practising certificate.

When can the Solicitor withdraw the money?

- Rule 7(a)(ii) permits a solicitor to transfer to office account money properly required in full or partial
reimbursement of money ‘expended’ by the solicitor on behalf of the client.

- Rule 7(a) – circumstances (other than in the case of trust money) under which money can be drawn from a
client’s account
7(a).
(i) Money required for a payment to or on behalf of the client;
(ii) Money required in full or partial reimbursement of money expended by the solicitor on behalf
of the client
(iii) Money drawn on the client’s authority;
(iv) Money require toward payment of the solicitor’s costs where bill of costs or other written intimation
of the amount of the costs incurred has been delivered to the client and the client has notified that the
money held can be applied towards or in satisfaction of such costs

When will Solicitor be treated as having expended money?

- If money is to be withdrawn from client account for payment of a solicitor’s costs, there must have been
delivered to the client a bill of costs or other written intimation of the amount of costs incurred.
- Law Society’s Directive

- the Council has ruled since 1991 that before a solicitor can deduct monies from a client account in
satisfaction of his costs, he must:
(i) have delivered to the client a bill of costs or other form of written intimation of the amount of
costs incurred;
(ii) have notified the client that such an amount will be so deducted in satisfaction of his or her costs;
and
(iii) have allowed a lapse of two working days after giving the notification referred to in sub-paragraph
(2) before transferring such amount of costs out of the client’s account

- Failure to do all of the above = breach of the Rules + guilty of professional misconduct under s. 83(2)
LPA
- Defalcation of client’s monies is a very serious matter – solicitor is a person who is put in a position of trust
by his client
- Notably, solicitors can hold large amounts of monies for their clients

- The withdrawal for costs must be for specific sums which relate to the bill or other written instrument
which has been delivered to the client
- Costs and disbursements should be transferred out of client account as soon as possible in accordance
with these provisions. Cannot leave sums or parts of it in acct as a cushion – in case there is mistake in
future so that there is some money left. Cannot do this! The minute you notice, must rectify immed.
- If a solicitor wishes to make payment on behalf of a client in excess of funds held for that client in the
client account, the excess payment must be out of his office or personal account
- payment to or on behalf of client should as far as possible be made by a crossed cheque
- solicitor should use his discretion in drawing against a cheque received from or on behalf of a client
before it has been cleared.

Cases:

Solicitor paid client’s money into personal account and used money for personal purposes
In re S Fung, a Solicitor [1941] MLJ 173
Respondent solicitor paid cheque for $1960 (entitled to client) into his own Bank Account. He also used some
of client’s money for purposes which did not concern his client.
Held:
If the solicitor does not keep his client’s money intact and if he uses some of it for purposes which do not
concern the client then there is a misappropriation at least for a time of at least part of the client’s money even
though later on the full amount due to the client is paid to him.
This amounts to professional misconduct.
- respondent did not keep his client’s money intact, equally clear that he used some of it for purposes which
did not concern his client
- thus, there was misappropriation for a time of part of the client’s money and this, in our opinion,
amounted to professional misconduct
- solicitor was suspended for a period of nine months
- truth was solicitor tried to move money through the account so that he could overcome some personal
difficulties

- NB: Important to ensure client’s account in credit and that the funds have been cleared y the bank, when
using money from client’s account

Must keep separate accounts for clients

In re Lim Keng Kooi [1941] MLJ 217
Respondent solicitor did not keep a separate client’s account with a bank and that he received monies due to a
client who was a beneficiary of an estate. Solicitor improperly retained such monies despite repeated
applications by the guardian of the beneficiary – denied that he had received such monies
Held:
(1) The rule requiring a solicitor to keep separate client accounts with the bank is a legal and not merely a
moral obligation.
(2) The evidence was overwhelming to show that there had been misrepresentation and deceit on the part of
the respondent and that he had been guilty of grossly improper conduct.
(3) Solicitor struck off rolls for offence.

In re G H Conaghan [1961] MLJ 61

- Respondent in his capacity as solicitor, received money from a third party to be paid to the client. The
money was not paid to the client but was knowingly applied by the respondent for other purposes.
- Held: (per Malaysian CJ Thompson)
- Professional misconduct of the most serious kind.
- The solicitor’s conduct may or may not amount to fraud.
- It may or may not be capable of being described by the euphemism of “miscalculation”
- It most certainly does amount to ‘professional misconduct of the most serious character’
- Has done harm not only to himself but also client and profession and to the public since is in public
interest tt there be legal profession observing highest possible stds of conduct
Weston v law society 1998 –
- held that solicitor’s acct rules existed to afford public max prxtn against improper and unauthd use of their
money and assure them of tt prxtn; hence sol under heavy oblig quite distinct fr duty to act honestly to
ensure observance of the rules

8. RULE 8

Money from client account -- how drawn

8. --(1) Except as provided under rule 7, no money shall be drawn from a client account unless the Council upon
an application made to it by the solicitor specifically authorises in writing such withdrawal.
(2) No money shall be drawn from a client account under rule 7 (1) (a) (ii) or (iv), (c) or (d) except by --
(a) a cheque drawn in favour of the solicitor; or
(b) a transfer to a bank account in the name of the solicitor not being a client account.
(3) No money shall be drawn from a client account under rule 7 (1) (c) or (d) by a cash cheque.
(4) No money shall be drawn from a client account by a cash cheque except with the written authority of the
client.
(5) Unless the solicitor has engaged or employed a book-keeper for the purposes of rule 11 (8), no sum
exceeding $5,000 shall be drawn from a client account except upon a cheque (or other instruction effecting the
withdrawal) signed by 2 solicitors.

- Rule 8(1) - apply to Council - states that the Council’s written authority is necessary for the withdrawal of
money from client account, other than as permitted by Rule 7.
- Rule 8(2)- Methods of withdrawal - of the Solicitors’ Accounts Rules provides that where money is to be
withdrawn from client account for payment to a solicitor, such money must be withdrawn either cheque in
favour of the solicitor or by way of a transfer to the solicitor’s office or personal account.
- Rule 8(3) - Cannot use cash cheque - states that no money should be drawn from the client account
under Rule 7(c) or (d) by a cash cheque.
- Rule 8(4) No money shall be drawn from a client account by a cash cheque except with the written
authority of the client.
- Rule 8(5) Unless the solicitor has engaged or employed a book-keeper for the purposes of rule 11(8),
no sum exceeding $5,000 shall be drawn from a client account except upon a cheque (or other
instruction effecting the withdrawal) signed by 2 solicitors.

9. CLIENT’S MONEY WITHHELD FROM CLIENT ACCOUNT (RULE 9)

- When u breach rule 3, try to salvage using rule 9

Where solicitor under no obligation to pay client’s money into client account
9. --(1) Notwithstanding the provisions of these Rules, a solicitor shall not be under obligation to pay into a client
account client's money held or received by him --
(a) in the form of cash, and is without delay paid in cash in the ordinary course of business to the client or on his
behalf to a third party;
(b) in the form of a cheque or draft which is endorsed over in the ordinary course of business to the client or on
his behalf to a third party and is not passed by the solicitor through a bank account or an account with an
approved finance company account; or
(c) which he pays into a separate bank account or into a separate account with an approved finance company
opened or to be opened in the name of the client or of some person designated by the client in writing.
(2) Notwithstanding the provisions of these Rules, a solicitor shall not pay into a client account, money held or
received by him --
(a) which the client for his own convenience requests the solicitor in writing to withhold from such account;
(b) for or towards payment of a debt due to the solicitor from the client or in reimbursement of money expended
by the solicitor on behalf of the client; or
(c) which is expressly paid to him --
(i) on account of costs incurred, in respect of which a bill of costs or other written intimation of the amount of the
costs has been delivered for payment; or
(ii) as an agreed fee (or on account of an agreed fee) for business undertaken or to be undertaken.
(3) Where money includes client’s money as well as money of the nature described in paragraph (2), that money
shall be dealt with in accordance with rule 5.
(4) Notwithstanding the provisions of these Rules, the Council may upon an application made to it by a solicitor
specifically authorise him in writing to withhold any client's money from a client account.

- Rule 9 of the Solicitors’ Accounts Rules provides a number of circumstances where a solicitor is under
no obligation to pay into client account client’s money held or received by the solicitor.
- The circumstances are:
- Eg private summons cases – medical fees. Normally cases settled before magistrate who will direct that
one side pay 1000. if acting for injured party, technically due to rule 3, must run to bank and open up
acct and give it to client. But don’t need to do this, can pay straightaway – do up written memorandum
to reflect this
- 9(1)(a) where money is received in the form of cash and is without delay paid in cash in the ordinary
course of business to the client or on the client’s behalf; or
- (b) where money is received in the form of a cheque which is endorsed over in the ordinary course of
business to the client or on his behalf to a 3rd party; or
- (c) where money is paid into a separate bank or finance company account in the name of the client or
some other person designated by the client in writing or acknowledged by the solicitor in writing to the
client.
- 9(2) Notwithstanding the provisions of these Rules, a solicitor shall not pay into a client account,
money held or received by him
- (a) which the client for his own convenience requests the solicitor in writing to withhold from such
account;
- (b) payment of a debt due to the solicitor or in reimbursement of money expended by the solicitor.
- (c) (i) On account of costs in respect of which a bill of costs or other written intimation of the
amount of the costs has been delivered for paymen. (ii) Agreed fee or on account of an agreed fee)
for business undertaken or to be undertaken.

- Debt owed to solicitor – Receipt of costs disbursements – council passed rule - where money towards costs
and disbursements collected and no work has yet commenced, or no written intimation of costs or bill of
costs has been rendered to the client, then the sum collected must be paid into the firm’s client’s account

- An agreed fee – agreement in writing – where money is expressly paid to the solicitor as an agreed fee or on
account of an agreed fee for business to be undertaken, Rule 9(2)(c)(ii) entitles the solicitor to pay the sum
to his or her office account without rendering a bill of costs or written intimation of costs

CLIENT’S MONEY HELD OUTSIDE CLIENT ACCOUNT

- Acknowledge in writing

10. TRANSFERS BETWEEN CLIENTS (RULE 10)

Rule 10 of the Solicitors’ Accounts Rules deals with the transfer of money between clients except as permitted
under the Rules. Where the book transfer relates to a private loan from one client to another the written authority
of the lender must be obtained.

Transfers between accounts

10. No sum shall be transferred from the ledger account of one client to that of another, except in
circumstances in which it would have been permissible under these Rules to have withdrawn from the client
account the sum transferred from the first client and to have paid into the client account the sum so transferred
to the second client.

11. BOOKS OF ACCOUNT (RULE 11)

- Rule 11 of the Solicitors’ Accounts Rules lays down detailed rules as to how the books of account of
solicitors must be kept.
Cash books, ledgers, journals, etc.
11. --(1) Every solicitor shall at all times keep properly written up in the English language such cash books,
ledgers and journals and such other books and accounts as may be necessary --
(a) to show all his dealings with --
(i) client’s money received, held or paid by him; and
(ii) any other money dealt with by him through a client account;
(b) to show separately in respect of each client all money of the categories specified in sub-paragraph (a) which
is received, held or paid by him on account of that client; and
(c) to distinguish all money of the categories mentioned in sub-paragraph (b) received, held or paid by him, from
any other money received, held or paid by him.
(2) All dealings referred to in paragraph (1) (a) shall be recorded as may be appropriate --
(a) in a client’s cash book or a client’s column of a cash book; or
(b) in a record of sums transferred from the ledger account of one client to that of another,
and in addition --
(i) in a client's ledger or a client’s column of a ledger; and
(ii) in a journal.
(2A) No other dealings shall be recorded in such client’s cash book and ledger mentioned in paragraph (2) or, as
the case may be, in such client's columns and journal.
(2B) All dealings of the solicitor relating to his practice as solicitor other than those referred to in paragraph (1)
(a) shall, subject to compliance with the Legal Profession (Solicitors’ Trust Accounts) Rules (R 9), be recorded in
such other cash book and ledger or such other columns of a cash book and ledger and such journal as the solicitor
may choose to maintain.
(3) In addition to the books and accounts referred to in paragraphs (2) and (2B), every solicitor shall keep a
record of all bills of costs (distinguishing between profit costs and disbursements) and of all written intimations
under rules 7 (1) (a) (iv) and 9 (2) (c) (i) delivered or made by the solicitor to his clients, which record shall be
contained in a bills delivered book or a file of copies of such bills and intimations.
(4) Every solicitor shall within one month of his commencing practice on his own account (either alone or in
partnership) and thereafter not less than once in every succeeding month cause the balance of his clients’ cash
books (or clients' column of his cash book) to be reconciled with his clients’ bank statements and shall keep in
the cash book or other appropriate place a statement showing the reconciliation.
(5) No solicitor shall make use of any computerised system of book-keeping for the purpose of this rule unless
any information which is recorded on such computerised system is capable of being reproduced in the form of a
printed document within a reasonable time.
(6) Every solicitor shall preserve for a period of at least 6 years from the date of the last entry therein --
(a) all accounts, books, ledgers and records kept by him under this rule; and
(b) all bank statements received by him in respect of any client’s account.
(7) Unless authorised in writing by the Council, no money may be withdrawn from a bank account or a deposit
account with an approved finance company, being or forming part of a client account, otherwise than under the
signature of a solicitor who holds a current practising certificate.
(8) Subject to rule 11A, a solicitor may engage or employ a book-keeper to keep his books and accounts
properly written up and reconciled as required by this rule.

- [Legal Profession (Professional Conduct) Rules 1998 – Rule 19: An Advocate and Solicitor shall
expeditiously render statement of accounts if requested by his client

Statement of accounts
19. An advocate and solicitor shall expeditiously render statements of accounts if requested by the client.

SUPERVISION OF CLIENT ACCOUNTS:

- Responsibility of sole proprietors, partners of law firms and directors of law corporations to exercise due
supervision over their client accounts
- In partnerships, responsibility of supervising the firm’s client accounts falls on all partners, whether salaried
or profit-sharing
- Once a solicitor holds himself out as a partner of a firm, the Council of the Law Society will look towards
him for any failure to exercise supervision over the firm’s accounts

Solicitors must have proper supervision over clients’ monies

Re Two Advocates and Solicitors 4 MC 53
 2 solicitors themselves had not made use of the clients’ monies. Cheated by their clerk who drew large sums of
money out of the clients’ monies.
Held:
Both held responsible for not having proper supervision over their client account. Evidence to show that there
had been defalcations of clients’ money by an employee of the advocates and solicitors. But the 2 solicitors,
after learning of the defalcations, continued their practice and in so doing, utilised the money of one or more of
their clients to make payments for and on behalf of their other clients.
Court noted that the respondents had been sufficiently penalised by having to replace a considerable sum of
money out of their own pocket and merely censured them.

- NB: Decision above was when it was not necessary to have Accountant’s Report for the client account –
which must now be submitted before you may apply for your practising certificate.

Re Edward Loke OS 290/1975

Re Patrick Ong OS 109/1979
Both cases above show that the practice of allowing clerks to supervise and operate the client account is very
dangerous.
Solicitors in both cases were struck off the rolls for using clients’ money.

Cf. In re a Solicitor [1950] MLJ 113

In this case, there was no defalcation of clients’ money. The solicitor did little work on his client’s matter,
although being paid $200 on account of an agreed fee. They only amounted to a breach of contract on the
solicitor’s part. No offence of grossly improper professional conduct. => interesting deviation

Law Society of Singapore v Lim Yee Kai [1999] 1 SLR 336

Defendants were partners of firm – D1 misappropriated money from client account – D2 resisted Law
Society’s application under s. 27A, LPA, arguing that D1 was solely responsible for the accounts of the firm
and that he was not responsible for D1’s illegal withdrawal of money from the client account
Held:
(1) When rules relating to accounts are breached, disciplinary action is warranted under s72(3) or 83(2)(j) of
the LPA
(2) Contravention of the rules may also amount to grossly improper conduct.
(3) D1 failed to comply with the Legal Profession (Solicitors’ Accounts) Rules, under s. 72 LPA. Thus,
current Practising Certificate suspended under s. 25A LPA
(4) S. 25A applied on the same ground to D2 – displayed ‘cavalier’ attitude towards the accounts of the firm;
Inexperience was no excuse.
(5) D2 shown he was not capable of practising as a partner or a sole-proprietor – failed in his duty to
safeguard interests of his clients. Nothing in affidavit showing circumstances that would displace this
conclusion
(6) No room for any lapses – must not pose clients at risk, or undermine public confidence in the profession

LPA RULES
Section 27A(1) LPA:
Where, at any time during the currency of the practising certificate of a solicitor, s. 25A would have effect in
relation to him by reason of any such circumstances as are mentioned in s. 25A(1) if he were to make an
application for a practising certificate at the time, a judge may, upon an application by the AG or the Council
made by originating summons and served upon the solicitor, direct that the current practising certificate of the
solicitor shall have effect subject to such conditions as the judge thinks fit.

Section 25A(1) LPA:

This section shall apply to any solicitor –
(a) whose suspension from practice has expired;
(b) who has been discharged from bankruptcy;
(c) who has been sentenced to a term of imprisonment in any civil or criminal proceedings in Singapore or
elsewhere;
(d) who has been convicted of an offence involving dishonesty or fraud;
 (e) who has been convicted of an offence in relation to his conduct in his practice of law;
(f) who has been found guilty of misconduct in any other professional capacity;
(g) whom the AG or the Council is satisfied is incapacitated by illness or accident to such extent as to be
unable to attend to his practice; or
(h) whom the AG or the Council is satisfied has failed to comply with any of the rules made under s. 72

Rules as to keeping of accounts by solicitors

Section 72 LPA:
(1) The Council shall make rules —
(a) as to the opening and keeping by solicitors of accounts at banks for clients’ money;
(b) as to the keeping by solicitors of accounts containing particulars and information as to moneys received,
held or paid by them for or on account of their clients;
(c) as to the opening and keeping by every solicitor who is a sole trustee, or who is co-trustee only with one
or more of his partners, clerks or servants, of an account at a bank for moneys of any trust of which he is
such a sole trustee or co-trustee;
(d) as to the keeping by every such solicitor of accounts containing particulars and information as to moneys
received, held or paid by him for or on account of any such trust; and
(e) empowering the Council to take such action as may be necessary to enable them to ascertain whether or
not the rules are being complied with.

(2) Such rules may provide for the manner in which the matters referred to in subsection (1) shall apply to law
corporations or to Joint Law Ventures or Formal Law Alliances registered under Part IXA.

(3) Such rules shall not come into operation until they have been approved by the Chief Justice who may if he
thinks fit consult any of the other Judges before giving his approval.

(4) Disciplinary proceedings may be taken against any solicitor who contravenes any rules made under this
section.

Basic Books (as required by the Rules) to be opened and maintained by the accounting staff:
(i) Cash Book – office and client;
(ii) General Ledger;
(iii) Client Ledger;
(iv) Bills Ledger;
(v) Bills Delivered Book;
(vi) Journal;
(vii) Copies of Bills;
(viii) Bank Reconciliation Statements – office and client;
(ix) Bank Statements/ passbooks – office and client; and
(x) Cheque Books and Stubs – office and client.

New Developments
- From 1 April 2004, if a law practice does not wish or cannot implement a 2 lawyer signatory control to
authorise payments from the client account that is above $5000, the law practice must engage a book
keeper to draw up the relevant books of accounts on a monthly basis as required by rule 11(1) and (2)
and also carry out the reconciliations of the client account as stipulated by rule 11(4)
- solicitors cannot merely rely on their book keeper or reporting accountant to check their accounting system
or supervise their client’s accounts
- it is the solicitor who faces disciplinary action for breaches of the rules and of the Legal Profession
(Accountant’s report) rules]

12. RECONCILIATION STATEMENTS

Rule 11(4) requires a solicitor within one month of his commencing practice on his own account (either alone or
in partnership) and thereafter not less than once in every succeeding month cause the balance of his clients’ cash
books (or clients’ column of his cash book) to be reconciled with his clients’ bank statements and shall keep in
the cash book or other appropriate place a statement showing the reconciliation.
RECONCILIATION
Client reconciliation has 3 important functions: -
1) It identifies how much the law practice owes its clients;
2) It enables the firm to compare the total of the law practice liabilities to clients with clients’ cash book
balances (client ledger reconciliation); and
3) It reconciles the clients’ accounts cash books with the clients’ account bank and fixed deposit statements
(client bank reconciliation).

Client reconciliation will enable the solicitor to detect the following:

1) The unauthorised deduction of bank charges;
2) Withdrawals from the client account before a cheque is cleared; and
3) Highlights instances of fraud, as the total cash balance will not be in agreement with the sum of the
individual client balances.

- Should not be left to book-keepers

(a) Client Bank Reconciliation

- Law firm or law corporation to carry out reconciliation of its client accounts with its respective bank or
finance company statements once every month. (Rule 11(4)) (since 1 april 2004)
- Law Society’s “Guide to Solicitors’ Accounts” recommendation = reconciliation to be drawn up monthly
- Typical errors from preparation of bank reconciliation statements include:
(i) Unauthorised deduction of bank charges; and
(ii) Withdrawal from a client account before a cheque is cleared.

(b) Client Ledge Reconciliation

- Maintained to record details of transactions with individual clients
- Ensures that all transactions with clients have been properly reconciled
- Procedure will highlight any instances of fraud as the total case balance will not be in agreement with the
sum of the individual client balances

Process:
- At least once every month
- Solicitor to draw up a statement of the total liabilities to clients (extracted from the balances shown on the
client’s ledger accounts) showing the funds available in the clients’ bank account and fixed deposit accounts
- Law Society Guidelines – once a month (!)
13. COMPUTERISED RECORDS
No solicitor shall make use of any computerised system of book-keeping for the purpose of this rule unless any
information which is recorded on such computerised system is capable of being reproduced in the form of a
printed document within a reasonable time.

14. RULE 11(6)

Every solicitor shall preserve for a period of at least 6 years from the date of the last entry therein –
(a) all accounts, books, ledgers and records kept by him under this rule;
and
(b) all bank statements received by him in respect of any client’s account.

Rule 11(6): Books must be kept for at least 6 years

- Solicitors cannot and must not merely rely on their book-keeper or reporting accountant to check their
accounting system or supervise their client’s accounts.
- Under the Act, it is the solicitor, not the book-keeper or accountant, who faces serious disciplinary
consequences for breaches of the Rules or the Legal Profession (Accountant’s Report) Rules
- Function of reporting accountant: Annual inspection on your accounts in accordance with Rule 4, Legal
Profession (Accountant’s Report) Rules\

15. AUTHORITY FOR WITHDRAWAL FROM CLIENT ACCOUNT

Rule 11(7): Authority for withdrawal from client account
- a withdrawal from a client bank or an Approved Finance Company may only be made where a specific
authority in respect of that withdrawal has been signed by a solicitor who holds a current practicising
certificate.

Rule 11(8): employment of bookkeeper

- subject to Rule 11A a solicitor may engage a bookkeeper to keep his books and accounts properly written up
and reconciled as required by this rule

ENGAGEMENT OF A BOOK-KEEPER

COMMON BRACHES OF SOLICITORS’ ACCOUNTS RULES

- a law practice may engage an accounting firm or accounting corporation as a book-keeper or a firm or
corporation that offers book-keeping services or employ a member of staff for this purpose
- if the book-keeping services are provided other than by an accounting firm or accounting corporation,
Councils’ prior written approval to engage or employ that book-keeper must be obtained at least 2
weeks prior to the engagement or employment
- Council has prescribed relevant professional qualifications and experience a book-keeper must possess

Rule 11A –
(1) A solicitor shall not engage or employ a bookkeeper for the purposes of rule 11(8) unless he has obtained the
written approval of the Council to do so.
(2) An application for the approval of the Council to engage or employ a book-keeper for the purposes of rule
11(8) shall be submitted to the Council in such form as the Council may require and shall be accompanied by a
statutory declaration affirmed or sworn/ If
the proposed book-keeper is an accounting firm, accounting corporation or is a firm or corporation providing
book-keeping services, the solicitor shall submit the application to the Council, accompanied by a statutory
declaration stating that
(i) no proprietor or partner of the accounting firm or an accounting corporation as the case may be, is an
immediate family member of the solicitor;
(ii) undertaking that he will inform the Council in writing immediately if the book-keeper encounters any of the
difficulties referred to in paragraph (8); and
(iii) undertaking that he will inform the Council in writing immediately if there are any changes in the matters
referred to in sub-paragraph (i);

Rule 11A (8) & (9)

(8) Subject to paragraph (9), the difficulties which a book-keeper shall be required to undertake to inform the
Council under paragraph (2) are as follows:
(a) the book-keeper is unable to reconcile the balance in the client’s cash book (or client’s column in the cash
book) with the client’s account bank statements in any month;
(b) the book-keeper is unable to properly write up the books and accounts as required by rule 11; or
(c) the solicitor fails to respond to such query from the book-keeper is necessary to enable the book-keeper to
carry out his duties referred to in sub-paragraph (a) or (b)
(9) The difficulties referred to in paragraph (8) shall not include the trivial breaches due to clerical errors or
mistakes in book-keeping, that were rectified upon discovery and did not result in any loss to the client.

16. SAFEGUARDS
In order to minimise unauthorised withdrawals, the solicitor should consider very carefully the safeguards which
could be built into the system.

Safeguards
- Minimise unauthorised withdrawals Eg. confirming parties’ passwords
- Internal controls:
(a) Segregation of duties – accountants; book-keepers
(b) Reconciliation statements – accounts in order
(c) Issued crossed cheques, not cash-cheques

17. COMPLIANCE OF THE SOLICITORS’ ACCOUNTS RULES - POWERS OF THE LAW SOCIETY
TO INSPECT ACCOUNTS
To ensure compliance with SAR, the Law Society is empowered to inspect accounts (Rule 12)

Power of Council to require production of books of account, etc.

12. --(1) In order to ascertain whether these Rules have been complied with, the Council acting --
(a) on its own motion; or
(b) on a written complaint lodged with it by a third party,
may require any solicitor to produce at a time and place to be fixed by the Council, his books of account, bank
pass books, loose-leaf bank statements, statements of account, vouchers and any other necessary documents for
the inspection of any person appointed by the Council and to supply to that person any necessary information and
explanations and that person shall prepare for the information of the Council a report on the result of such
inspection.
(2) Such report may be used as a basis for proceedings under the Act.
(3) Upon being required to do so, a solicitor shall produce such books of account, bank pass books, loose-leaf
bank statements, statements of account, vouchers and documents at the time and place fixed.
(4) Before making any appointment under paragraph (1), the Council shall consider any objection made by any
such solicitor to the appointment of a particular person on personal or other proper grounds.
(5) Before instituting an inspection on a written complaint lodged with it by a third party, the Council --
(a) shall require prima facie evidence that a ground of complaint exists; and
(b) may require the payment by that party to the Council of a reasonable sum to be fixed by it to cover the costs
of the inspection, and the costs of the solicitor against whom the complaint is made.
(6) The Council may deal with any sum so paid in such manner as it thinks fit.

General Principles
An inspection carried out under this Rule overrides any confidence or privilege between solicitor and client.

Power to waive provisions

16. The Council may, if it thinks fit in any particular case, waive any of the provisions of these Rules in writing,
subject to such terms and conditions as the Council may impose

18. ACCOUNTANTS REPORT RULES [AS AMENDED BY THE LEGAL PROFESSION

(ACCOUNTANT’S REPORT) (AMENDMENT) RULES 1998]

19. NATURE OF ACCOUNTANT’S EXAMINATION

20. CLIENT’S CONFIDENTIALITY

A solicitor may decline to produce to the accountant any document which
the accountant may consider it necessary to inspect, on the ground of confidentiality as between the
solicitor and client. What is likely to happen?

Solicitor/client privilege
- client’s confidentiality
- Thus may object to Accountant’s examination
- If so, Accountant will qualify his report
- Where report qualified, affects practising certificate to be issued to solicitor
- Solicitor will then be called up by Registrar to explain why objected/ confidentiality

Waiver in writing by Council of the Law Society – rule 16

- waiver of any of the provisions of these rules subject to the terms and conditions the council may impose

21. CASES WHERE DELIVERY OF AN ACCOUNTANT’S REPORT IS UNNECESSARY

- Rule 7 of the Accountant’s Report Rules prescribes certain cases where the delivery of an accountant’s
report is unnecessary. In the application for a practising certificate a solicitor is required to state whether he
or she is or is not obliged to comply with the Solicitors’ Accounts Rules.
- However, an accountant’s report is required under the rules from a solicitor who has been held out as a
partner of another solicitor who has held or received client’s money. What about those who have retired
from practice?

22. RESPONSIBILITY FOR DELIVERY OF THE ACCOUNTANT’S REPORT

- Section 73 of the LPA
Accountant’s report
73. —(1) Every solicitor shall with every application made by him for a practising certificate, unless he satisfies
the Council that owing to the circumstances of his case it is unnecessary to do so, deliver to the Registrar a report
signed by an accountant (referred to in this section as an accountant’s report) and shall deliver a copy of the
accountant’s report to the Society.
(2) The accountant’s report shall —
(a) state that in compliance with this section and rules made thereunder the accountant has examined the books,
accounts and documents of the solicitor or his firm or the law corporation for such accounting period as may be
specified in the report;
(b) state whether or not the accountant is satisfied, from his examination of the books, accounts and documents
produced to him and from the information and explanations given to him, that during the said accounting period
the solicitor or his firm or the law corporation has complied with any rules made under section 72 (1) (a) and (b);
(c) state, if the accountant is not satisfied as aforesaid, the matters in respect of which he is not so satisfied;
(d) contain such information as may be prescribed by rules made by the Council under this section; and
(e) be delivered to the Society not more than 6 months (or such other period as may be prescribed by any rules
made under this section) after the end of the accounting period specified in the report.
[4/2000]
(3) Subject to any rules made under this section, the accounting period for the purposes of an accountant’s report
shall —
(a) begin at the expiry of the last preceding accounting period for which an accountant’s report has been
delivered;
(b) cover not less than 12 months;
(c) terminate not more than 12 months, or such less period as the said rules may prescribe, before the date of the
delivery of the report to the Society; and
(d) where possible, consistently with paragraphs (a), (b) and (c), correspond to a period or consecutive periods
for which the accounts of the solicitor or his firm or the law corporation are ordinarily made up.
[4/2000]
(4) The Council shall make rules to give effect to this section, and such rules shall prescribe —
(a) what qualification shall be held by an accountant by whom an accountant’s report may be given; and
(b) the nature and extent of the examination to be made by the accountant of the books and accounts of a solicitor
or his firm or the law corporation and of any other relevant documents with a view to the signing of a report to be
delivered by the solicitor under this section.
[4/2000]
(5) Such rules may include provision for —
(a) permitting in such special circumstances as may be defined in the rules a different accounting period from
that specified in subsection (3); and
(b) regulating any matters of procedure or matters incidental, ancillary or supplemental to this section.
(6) Rules made under this section shall not come into operation until they have been approved by the Chief
Justice who shall consult the Attorney-General and may, if he thinks fit, consult any of the other Judges before
giving his approval.
(7) Disciplinary proceedings may be taken against any solicitor who fails to comply with this section or any rules
made thereunder.
(8) This section shall not apply to a solicitor who applies for a practising certificate to practise as a locum
solicitor.

Delivery of Accountants’ Report

- Nature of Accountant’s examination – checks & balances; keeps books
- Accountants’ Report only necessary if solicitor is held out to be a partners of another solicitor who has held
or received client’s money (Rule 7 of the Accountant’s report rules) – Now includes law corporations
- Retired from practice? Obliged to produce report by fact that you were a partner (involved in the matters)
even if you have left
- Responsibility for delivery of the accountant’s report
- S73 LPA

23. TRIVIAL BREACHES

- Cannot be precisely defined. Factors taken into consideration:
a) Amount involved
b) Nature of the Breach
c) The time outstanding before correction

24. LEGAL PROFESSION (DEPOSIT INTEREST) AS AMENDED BY THE LEGAL PROFESSION

(DEPOSIT INTEREST) RULES 1998

Rule 2
What are the consequences for failure to adhere to the Rules?
Operative word - “at time of receipt”
Fixed deposits and their management
2. --(1) Subject to rule 4, when a solicitor holds or receives money for or on account of a client, the solicitor shall
--
(a) deposit such money separately in a bank or an approved finance company by way of fixed deposit repayable
on demand in the name of the solicitor or his firm and the name of the client or the matter concerned, and
account to the client for any interest earned thereon; or
(b) pay to the client out of his own money the sum equivalent to the interest which would have accrued for the
benefit of the client if the money had been deposited separately in a bank or an approved finance company by
way of fixed deposit as provided in sub-paragraph (a).
(2) Nothing in paragraph (1) shall require a solicitor to deposit or to account to a client for interest or to pay
interest to a client unless --
(a) the sum of money received by the solicitor exceeds $5,000 at the time of receipt; and
(b) the instructions to the solicitor at the time of receipt are such that he knows that the sum of money so received
will not, within 4 months thereafter, be either wholly disbursed or reduced to a sum below $5,000 and the sum of
money so received is not in fact within such period so disbursed or reduced.
(3) In this rule, “approved finance company” means any finance company registered under the Finance
Companies Act (Cap. 108) which is approved by the Minister to accept deposits of client's money for the purpose
of these Rules

See Rule 3
Client's remedies
3. --(1) Without prejudice to any other remedy which may be available to him, any client who feels aggrieved
that interest, or a sum equivalent thereto, has not been paid to him under these Rules shall be entitled to require
the solicitor to obtain a certificate from the Council as to whether or not interest ought to have been earned for
him.
(2) If so, the amount of such interest and on the issue of such a certificate the sum certified to be due shall be
payable by the solicitor to the client.

- Rules governing when a solicitor holds or receives money for or on account of a client
- See especially Rule 2(2)
- If breach, write to Council of Law Society and make good the interest: Rule 3

Saving
4. Nothing in these Rules shall --
(a) affect any arrangement in writing whenever made between a solicitor and his client as to the application of
the client's money or interest thereon; or
(b) apply to money received by a solicitor, being money subject to a trust of which the solicitor is a trustee.

25. SECTION 67(1)(B) INCOME TAX ACT

- If the gross receipt in the preceding year exceeded $12 000 from the performance of services,
- There is a requirement to give serially numbered receipts for every sum received for such services
performed

26. IMPOSITION OF CONDITIONS

Section 27A of the Legal Profession Act
(see Law Society of Singapore v Lim Yee Kai [1999] 1 SLR 336, above)

Imposition of conditions while practising certificates are in force

27A. —(1) Where, at any time during the currency of the practising certificate of a solicitor, section 25A would
have effect in relation to him by reason of any such circumstances as are mentioned in section 25A (1) if he were
to make an application for a practising certificate at that time, a Judge may, upon an application by the Attorney-
General or the Council made by originating summons and served upon the solicitor, direct that the current
practising certificate of the solicitor shall have effect subject to such conditions as the Judge thinks fit.
[40/96]
(2) Where an order under subsection (1) has been made against a solicitor by reason only of any such
circumstances as are mentioned in section 25A (1) (c), (d), (e), (f), (g) or (h), the solicitor may, upon proof of a
change in the circumstances or for other good cause, apply to a Judge by summons for a reconsideration of the
matter.
[40/96]
(3) Any application under subsection (2) shall be served on the Attorney-General and the Society, and the
Attorney-General and the Society may appear at the hearing to make representations.
(4) At the hearing of the application, the Judge shall consider all the circumstances of the case and may make
such order as he thinks fit.
(5) No appeal shall lie from any order made by a Judge under subsection (4).
(6) Section 25A (3) shall apply for the purposes of subsection (1) as it applies for the purposes of section 25A (2)
(b).

- Council of Law Society can impose certain practice directions, provided offence is serious
- Examples:
- C disappeared but monies still in client account – Solicitor to satisfy outstanding bill
- Suspect monies in client’s account obtained by fraud – how?

27. CANCELLATION OF PRACTISING CERTIFICATES

Section 28 of the Legal Profession Act
Cancellation of practising certificates
28.
(1) The Council may, if it appears to the Council that a practising certificate has been issued to any solicitor
contrary to the provisions of this Act or that the accountant’s report submitted by any solicitor does not comply
with section 73, apply to a Judge by originating summons for an order directing the Registrar to cancel the cer-
tificate.

(2) Such an application shall be served on the advocate and solicitor concerned and upon the hearing thereof
the Judge may make such order as he may think fit and may also make such order for the payment of costs as
may be just.

(3) Disciplinary proceedings may be taken against any solicitor if in, or in relation to, an application for a
practising certificate he makes a false statement material to the application.

28. DISCIPLINARY PROCEEDINGS SECTION 83(2)(J) OF THE LEGAL

PROFESSION ACT
Power to strike off roll or to suspend or censure
83.
(1) All advocates and solicitors shall be subject to the control of the Supreme Court and shall be liable on due
cause shown to be struck off the roll or suspended from practice for any period not exceeding 5 years or
censured.

(2) Such due cause may be shown by proof that an advocate and solicitor
…
(j) has contravened any of the provisions of this Act in relation thereto if such contravention warrants
disciplinary action;

(5) In any proceedings under this Part, the court may in addition to the facts of the case take into account the
past conduct of the person concerned in order to determine what order should be made.

(6) In any proceedings instituted under this Part against an advocate and solicitor consequent upon his
conviction for a criminal offence, an Inquiry Committee, a Disciplinary Committee and a court of 3 Judges of
the Supreme Court referred to in section 98 shall accept his conviction as final and conclusive.
Penalties for Breach
• conviction of errant solicitor for criminal breach of trust
• invariably leads to show cause proceedings under s. 95

LPA s95. —(1) Within 21 days of being ordered to pay a penalty by the Council, the advocate and solicitor
concerned may apply to a Judge to set aside the order.
(2) Such an application shall be made by way of originating summons and shall be served on the Society and
shall be heard in chambers unless the Judge of his own motion or on the application of any party sees fit to order
a hearing in open court.
(3) Upon the hearing of the application, the Judge may —
(a) affirm or vary the penalty; or
(b) set aside the order for a penalty,
and may make an order for payment of costs by or to either the Society or the applicant as may be just.
(4) If no such application is made or if the order for a penalty is affirmed or varied by the court, the advocate and
solicitor shall pay the penalty to the Society.
(5) Any penalty not paid may be recoverable by the Society as a judgment debt.

Due cause
 while not every conviction of a criminal offence would imply a defect of character rendering a solicitor unfit
for his profession, the fact that the offence involved dishonesty committed by a solicitor in his professional
capacity as an advocate and solicitor was sufficient in itself to demonstrate that due cause had been shown:
Law Society of Singapore v Caines Collin [2004] SGHC 250

Caines - Facts
The respondent was an advocate and solicitor, and the sole proprietor of the law firm M/s Khosa & Caines.
On 2 September 2002, he pleaded guilty to dishonestly misappropriating at least $199,550.51 of his clients’
moneys and was convicted on four charges of criminal breach of trust under s 409 of the Penal Code (Cap
224, 1985 Rev Ed). Seven other charges were taken into consideration, and he was sentenced to a total of four
years’ imprisonment. The Law Society of Singapore subsequently commenced disciplinary proceedings
against him, and applied to make absolute an order to show cause under s 98(5) of the Legal Profession Act
(Cap 161, 2001 Rev Ed) (“the LPA”).
Held, granting the application and striking the respondent off the roll:
(1) Section 83(6) of the LPA states that the court must accept the respondent’s conviction as final and
conclusive. Although not every conviction of a criminal offence would imply a defect of character that
rendered a solicitor unfit for his profession, the present case was straightforward. The fact that the offences
involved dishonesty committed by the respondent in his capacity as an advocate and solicitor was sufficient in
itself to demonstrate that due cause had been shown: at [11] to [12].
(2) Where a solicitor has been convicted of a criminal offence involving fraud and dishonesty, the court has
almost invariably chosen to strike him off the roll. The practice of law is an honourable profession that
demands the highest degree of integrity and trustworthiness from its members. The respondent’s appalling
conduct demonstrated that he was entirely unfit to remain on the roll, and the only appropriate order was to
strike him off the roll of advocates and solicitors: at [14] and [17].
 in such circumstances, the court will, upon due cause being shown, order that the errant solicitor be
stuck off the roll

Mitigating factors
- in cases of proven dishonesty, mitigating factors did not tilt the balance towards the more lenient sanctions
of suspension and censure except where they were consistent with the objectives of preserving the good
name of the legal profession and of the protection of the public:

Law Society of Singapore v Janaini bin Manin [2004] 4 SLR 539

Facts
Junaini bin Manin (“the respondent”) was an advocate and solicitor of the Supreme Court of Singapore of
some 18 years’ standing. He pleaded guilty to five charges of criminal breach of trust under s 409 of the Penal
Code (Cap 224, 1985 Rev Ed), and agreed to have eight other charges of criminal breach of trust taken into
consideration for sentencing. In relation to these five charges, the respondent dishonestly misappropriated a
total of $1,360,185.12. If the amounts stated in the other eight charges were taken into consideration, the total
amount that the respondent misappropriated would have been $1,682,929.55. Twelve clients fell victim to his
defalcation. The respondent used the misappropriated money for his personal expenses. No restitution was
made by the respondent.
The respondent was sentenced by the district court to a total of seven years’ imprisonment. The Law Society
of Singapore subsequently applied to make absolute an order to show cause under s 98(5) of the Legal
Profession Act (Cap 161, 2001 Rev Ed) (“the LPA”). The hearing before the court of three judges proceeded in
the respondent’s absence as he did not wish to be heard.
Held, granting the application and striking the respondent off the roll:
(1) The settled position in cases of proven dishonesty was that mitigating factors did not tilt the balance
towards the more lenient sanctions of suspension from practice for up to five years and of censure provided in
s 83(1) of the LPA except where they were consistent with the objectives of preserving the good name of the
legal profession and of the protection of the public. The mitigating factors relating to the respondent had
hardly any relation to these objectives: at [25] to [27].
(2) The respondent was no first offender in the sense of having used his clients’ funds on an isolated
occasion only. The defalcation took place over a period of about seven years involving 12 clients. The
respondent embezzled a huge sum of money and there was no prospect of him paying back the same or any
significant part thereof to his clients. He squandered most of it on his extravagant ways. Therefore, even if
distinctions were to be drawn between cases of dishonesty in the discharge of functions as an advocate and
solicitor, the respondent’s case would have qualified for the “worst case scenario” category: at [27].
(3) The respondent was clearly unfit for the legal profession and should not be allowed to remain on the roll
of advocates and solicitors. It was therefore ordered that the show cause order be made absolute and that the
respondent be struck off the roll: at [28].

 occupational stress, it has been held, can never be an excuse for dishonesty: Law Society of Singapore
v Ezekiel Caleb Charles James [2004] 2 SLR 256
Facts
The respondent was an advocate and solicitor, and an equity partner of M/s Khattar Wong & Partners (“the
firm”) at the material time. The respondent negligently settled a suit in excess of the mandate granted to him
by his client. To conceal his negligence, the respondent made unauthorised withdrawals totalling $128,000
from the firm’s omnibus clients’ account and paid it over to the Public Trustee in settlement of the claim. The
respondent was subsequently charged and convicted of one count of criminal breach of trust under s 406 of the
Penal Code (Cap 224).
The Law Society relied on the respondent’s conviction and applied to make absolute an order to show cause
and for disciplinary action to be taken. Before the court, the sole issue was the appropriate order to be made
under s 83(1) of the Legal Profession Act (Cap 161). The respondent contended that a striking off was not
warranted as there were significant mitigating factors. These were: (i) he had not benefited financially from
the unauthorised withdrawals; (ii) he had made full restitution; and (iii) he had been under stress at the time of
the offence.
Held, granting the application and striking the respondent off the roll:
(1) In cases involving solicitors who had been convicted of a criminal offence, the court considering the
appropriate order ought to, first and foremost, keep in mind the need to preserve the good name of the
profession and the protection of the public. The court could only consider mitigating circumstances so far as
was consistent with these two related objectives: at [10].
(2) Mere censure or suspension would not have been appropriate in the present case. Though the respondent
did not benefit financially from his actions, that did not alter the fact that he jeopardised his clients’ interests in
order to conceal his own negligence: at [11].
(3) Further, little weight could be given to the fact that he made full restitution of the moneys from his own
funds and suffered a financial loss. It was the respondent’s own negligence that caused him to the make the
unauthorised withdrawals in the first place: at [12].
(4) In addition, stress was part and parcel of the legal profession and could not be an excuse for dishonesty:
at [14].

 In The Law Society of Singapore v Chiong Chin May Selena [2005] 4 SLR 320:
 respondent had a history of manic-depressive psychosis
 she had been hospitalized for her condition and had received electro-convulsive therapy for post-natal
depression
 as a result of her illness, she was unable to hold onto any jobs for any substantial length of time, and finally
decided to set up her own law practice
 unfortunately, she was clearly not equipped professionally/mentally to cope with the rigours and demands of
a sole proprietorship

(1) her first mistake was making her husband a co-signatory of the firm’s client and office accounts, which was
a breach of s. 77(2)

Solicitor not to act as agent for any unauthorised person

77. —(2) No solicitor shall authorise any unauthorised person to operate any bank account in
the name of the solicitor or his firm or the law corporation and maintained by the solicitor or his
firm or the law corporation in connection with his practice as a solicitor.

(2) this was compounded when the Law Society discovered, after she had ceased practice without notice,
(3) that she had failed to prepare or maintain any of the requisite financial records or documents mandated by
the Solicitors’ Accounts Rules
 she was therefore charged for contravening s. 83(2)(b) and 83(2)(j)

Power to strike off roll or suspend or censure

83. —(2) Such due cause may be shown by proof that an advocate and solicitor —
(b) has been guilty of fraudulent or grossly improper conduct in the discharge of his professional
duty or guilty of such a breach of any usage or rule of conduct made by the Council under the
provisions of this Act as amounts to improper conduct or practice as an advocate and solicitor;
(j) has contravened any of the provisions of this Act in relation thereto if such contravention
warrants disciplinary action; or
 Court reiterated that any breach of the Solicitors’ Accounts Rules would be deemed to warrant disciplinary
attention, and failure to maintain the requisite financial and/or accounting records would inevitably result in
a finding of professional misconduct
 Having found that the charges were made out, however, the Court was sympathetic to the respondent’s
plight in considering the appropriate penalty
 Court noted that the respondent was guilty of dishonesty and indiscretion caused purely by human frailty
and not be a character defect or deficit
 She was therefore suspended from practice for one year, subject to her undertaking not to commence another
sole proprietorship

29. THE LAW SOCIETY’S RECOMMENDATIONS

(A) A Second Key – for firms that have an approved bookkeeper
- For withdrawals of $50,000 or more
- Second key – counter signature could be provided by
(i) Certified Public Accountants
(ii) Trusties Companies
(iii) Law Trust mechanism to be established by the Law Society or by the Singapore Academy of Law

(B) No Cash Cheques

Remove present Rule or limit the amount that can be paid by a cash cheque.

- Why even have client’s account? – shldnt we just let the banks do it? Might even be more efficient.
- Sole proprietorship

30. ANTI-MONEY LAUNDERING

- Professional Conduct Rules to be amended.
(a) To obtain satisfactory evidence of the identity of their clients
(b) To ensure they deal with a “real” person or company, before acting for them
- Before opening and maintaining any account for or hold or receive moneys from any Anonymous source or
has a client with a fictitious name.

- Law soc on 1 mar 2003 published guidance note for lawyers on prevention of money laundering and funding
of terrorist activities
 o Duty f every person to disclose a suspicious transaction report to police subj to sol and client
privilege if suspects any property or money he holds rep proceeds of drug trafficking or
belongs to terrirosit under
 Corruption, drug trafficking and other serious crimes (confiscation of benefits) act
 Terrorism (suppression of financing) act 2002
- Money laundering – criminals conceal illicitly acd fudns by converting them into legit income to maintain
control over the same under cover of legit income
- See guidance note on website of law soc
o Impt for lawyers to know their client and business to avoid inadvertently assisting criminals
- LPPCR in 2006 – will be amended to req lawyers to obtain satisf evid of identify of clients to ensure dealing
with real person or body before acting for them
- The now ur client reqt is cardnal rofess duty for every lawyer to comply with before sol client rr is estd
before any money deposited into client account
- See PD issued by council
- Nec to ensure sg lawyers meet stds reqd by Financial Action Task Force set up under Organisation for Eco
Cooperation and Devpt
- Council under amended rules empowered t carry out inspection of law practice to ascertain whether rule
changes complied with

Knowing client – New Rules

- Must not open and maintain any acct for or hold and receive moneys fr anonymous source or fr client with
obv fictituos name
- Must est suitable arrangements to determine, for new matters, identify of client when accepting instructions
- And determine nature and purpose of business rr
o Property buying and selling
o Manaing client money etc
o Creation, operation or management of corporations, trusts etc
o Buying and sellig business entities
o Complex, unusual large transactions and htose with no apparent eco purpose for client
- If client x prov satisf evid of identiy or info reqd at tiem of instructing and fr time to time, then lawyer msut
refuse to act or withdraw fr representing client
- Estg identity of client must be at time of engagement and fr tiem to time and must achive:
o Identity of clkient
o If moneys to be held by law firnm, the legal and beneficial owners of moneys or securities to
be deposited or held by law firm
o Intended purpose and business rr bet client and 3rd party
How to check identity
- Indiv
o Obj evid
o Ask who exactly is client – eg if practice is acting for one of grp of comp or acting on
instructions of another law practice or banl etc
o If foreigner fr country on FATF list of non cooperative countries, shld consider whether mor
checks even with third party before rr estd
o Request sight of and take copy of NRIC or passport or employment pass or work permit
o Under Rule 23 – est auth of agent to instruct and est identity of principal client
- Trusts and corporate clients
o Must check idntifies of trustees – trusts popular vehicles for money launderers
o Disting bet dealings with listed comp and private comp
o If listed in sg recogd stock exchange or investment exchange or FATF member country
exchange, no further identity reqd beyond evid listing
 For banks or investment or finance comp under another FATF country, similar evid
of Regis or listing suff to est identity
o Fir private comp, req copy of cert of incorpn, list of direct9ors, shrs, and registered address
 Alkso get identify o director or shr instructing the lawyer
  May be nec to make chcks abt beneficial ownership of comp if ownership is with
mere nominees
o If client is new subsidiary of comp of existing client for which check made, evid of subsid still
reqd
- Partnerships and LLPs
o Evid of identity of partners instructing practice and evid tt business is registred
o If law practice, check with law soc or online director and for other professions, with their
professional bodies
o LLPs - need evid f estment and personal identiy of partner instructing matter
- Politically exposed persons
o Indiv entrusted with prominent public fn – eg senior politician, mniitiary official etc
o To obtain senior management approval of law practice and take reasonable steps to est source
of wealth

Letters of engagement
- State why req proof of identity through completion of practice’s std foirm with supporting identity doc
before accepting retainer
- Advise client tt reqd to report to auth if suspect tt client is money laundering
- Also advise tt relevant auth can direct u to disclose docs to them and must do s unless law of sol-client
privilege applicable

Keeping records
- To prove took steps to est identiy o client – new compliance rule for law practices
- Msut retain for 5 yrs docs used to determine identity of client after matter completed
- Disclosure of info must be refused if breaches sol-client privilege