SRA Handbook

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Part 7: Overseas practice

Rule 47: Purpose of the overseas accounts provisions

47.1

The purpose of applying different accounts provisions to overseas practice is to ensure similar protection for client money (overseas practice) but by way of rules which are more adaptable to conditions in other jurisdictions.

Rule 48: Application and Interpretation

48.1

Part 7 of these rules applies to your practice from an office outside England and Wales to the extent specified in each rule in this Part. If compliance with any applicable provision of Part 7 of these rules would result in your breaching local law, you may disregard that provision to the extent necessary to comply with that local law.

48.2

The SRA Handbook Glossary 2012 shall apply and, unless the context otherwise requires:

1.1

all italicised terms shall In Part 7 of these rules:

AJA

means the Administration of Justice Act 1985;

approved regulator

means any body listed as an approved regulator in paragraph 1 of Schedule 4 to the LSA, or designated as an approved regulator by an order under paragraph 17 of that Schedule;

authorised body

means a body that has been authorised by the SRA to practise as a licensed body or a recognised body;

authorised non- SRA firm

means a firm which is authorised to carry on legal activities by an approved regulator other than the SRA;

body corporate

means a company, an LLP, or a partnership which is a legal person in its own right;

BSB

means the Bar Standards Board;

client account (overseas practice)

means an account at a bank or similar institution, subject to supervision by a public authority, which is used only for the purpose of holding client money (overseas practice) and/or trust money, and the title or designation of which indicates that the funds in the account belong to the client or clients of a solicitor or REL or are held subject to a trust;

client money (overseas practice)

means money received or held for or on behalf of a client or trust (but excluding money which is held or received by a multi-disciplinary practice - a licensed body providing a range of different services - in relation to those activities for which it is not regulated by the SRA);

Establishment Directive

means the Establishment of Lawyers Directive 98/5/EC;

Establishment Directive profession

means any profession listed in Article 1.2(a) of the Establishment Directive, including a solicitor, barrister or advocate of the UK;

firm (overseas practice)

means any business through which a solicitor or REL carries on practice other than in-house practice;

lawyer-controlled body

means an authorised body in which lawyers of England and Wales constitute the national group of lawyers with the largest (or equal largest) share of control of the body either as individual managers (overseas practice) or by their share in the control of bodies which are managers (overseas practice);

lawyer of England and Wales

means a solicitor, or an individual who is authorised to carry on legal activities in England and Wales by an approved regulator other than the SRA, but excludes a member of an Establishment Directive profession registered with the BSB under the Establishment Directive;

legal activity

has the meaning given in section 12 of the LSA and includes any reserved legal activity and any other activity which consists of the provision of legal advice or assistance, or representation in connection with the application of the law or resolution of legal disputes;

licensed body

means a body licensed by the SRA under Part 5 of the LSA;

licensing authority

means an approved regulator which is designated as a licensing authority under Part 1 of Schedule 10 to the LSA, and whose licensing rules have been approved for the purposes of the LSA;

LLP

means a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000;

LSA

means the Legal Services Act 2007;

manager (overseas practice)

means:

a member of an LLP;

a director of a company;

a partner in a partnership; or

in relation to any other body, a member of its governing body;

non-lawyer

means:

an individual who is not a lawyer practising as such; or

a body corporate or partnership which is not:

an authorised body;

an authorised non-SRA firm; or

a business, carrying on the practice of lawyers from an office or offices outside England and Wales, in which a controlling majority of the owners and managers are lawyers;

owner

in relation to a body, means a person with any ownership interest in the body;

partner

means a person who is or is held out as a partner in a partnership;

partnership

means an unincorporated body in which persons are or are held out as partners, and does not include a body incorporated as an LLP;

practice from an office

includes practice carried on:

from an office at which you are based; or

from an office of a firm (overseas practice) in which you are the sole practitioner or a manager (overseas practice), or in which you have an ownership interest, even if you are not based there,

and "practising from an office" should be construed accordingly;

recognised body

means a body recognised by the SRA under section 9 of the AJA;

REL

means registered European lawyer, namely, an individual registered with the SRA under regulation 17 of the European Communities (Lawyer's Practice) Regulations 2000 (S.I. 2000 no. 1119);

REL-controlled body

means an authorised body in which RELs, or RELs together with lawyers of England and Wales and/or European lawyers registered with the BSB, constitute the national group of lawyers with the largest (or equal largest) share of control of the body, either as individual managers (overseas practice) or by their share in the control of bodies which are managers (overseas practice), and for this purpose RELs and European lawyers registered with the BSB belong to the national group of England and Wales;

reserved legal activity

(a)

has the meaning given in section 12 of the LSA, and includes the exercise of a right of audience, the conduct of litigation, reserved instrument activities, probate activities, notarial activities and the administration of oaths, as defined; and in Schedule 2 to the LSA;

(b)

all terms shall be interpreted,

SA

means the Solicitors Act 1974;

Society

means the Law Society, in accordance with section 87 of the GlossarySA;

sole practitioner

means a solicitor or REL practising as a sole principal, and does not include a solicitor or REL practising in-house;

solicitor

means a person who has been admitted as a solicitor of the Senior Courts of England and Wales and whose name is on the roll kept by the Society under section 6 of the SA;

SRA

means the Solicitors Regulation Authority, and reference to the SRA as an approved regulator or licensing authority means the SRA carrying out regulatory functions assigned to the Society as an approved regulator or licensing authority;

trustee

includes a personal representative (i.e. an executor or an administrator), and "trust" includes the duties of a personal representative;

UK

means United Kingdom.

Rule 49: Interest

49.1

You must comply with rule 49.2 below, if you hold client money (overseas practice) and you are:

(a)

a solicitor sole practitioner practising from an office outside England and Wales, or an REL sole practitioner practising from an office in Scotland or Northern Ireland;

(b)

a lawyer-controlled body or (in relation to practice from an office in Scotland or Northern Ireland) a lawyer-controlled body, or an REL-controlled body;

(c)

a lawyer of England and Wales who is a manager (overseas practice) of a firm (overseas practice) which is practising from an office outside the UK, and lawyers of England and Wales control the firm (overseas practice), either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners; or

(d)

a lawyer of England and Wales or REL who is a manager (overseas practice) of a firm (overseas practice) which is practising from an office in Scotland or Northern Ireland, and lawyers of England and Wales and/or RELs control the firm (overseas practice), either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners.

49.2

If it is fair and reasonable for interest to be earned for the client on that client money (overseas practice), you must ensure that:

(a)

the client money (overseas practice) is dealt with so that fair and reasonable interest is earned upon it, and that the interest is paid to the client;

(b)

the client is paid a sum equivalent to the interest that would have been earned if the client money (overseas practice) had earned fair and reasonable interest; or

(c)

any alternative written agreement with the client setting out arrangements regarding the payment of interest on that money is carried out.

49.3

In deciding whether it is fair and reasonable for interest to be earned for a client on client money (overseas practice), you must have regard to all the circumstances, including:

(a)

the amount of the money;

(b)

the length of time for which you are likely to hold the money; and

(c)

the law and prevailing custom of lawyers practising in the jurisdiction in which you are practising.

Rule 50: Accounts

Practice from an office outside the UK

50.1

You must comply with rule 50.3 and 50.4 below in relation to practice from an office outside the UK if you are:

(a)

a solicitor sole practitioner who has held or received client money (overseas practice);

(b)

a lawyer-controlled body which has held or received client money (overseas practice) as a firm (overseas practice);

(c)

a lawyer of England and Wales, or a non-lawyer, who is a manager (overseas practice) of a lawyer-controlled body which holds or receives client money (overseas practice);

(d)

a lawyer of England and Wales who is a manager (overseas practice) of any other firm (overseas practice) which is controlled by lawyers of England and Wales, either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners, if the firm (overseas practice) holds or receives client money (overseas practice);

(e)

a solicitor who holds or receives client money (overseas practice) as a named trustee;

(f)

a lawyer of England and Wales, or a non-lawyer, who is a manager (overseas practice) of a lawyer-controlled body and who holds or receives client money (overseas practice) as a named trustee.

Practice from an office in Scotland or Northern Ireland

50.2

You must comply with rule 50.3 and 50.4 below in relation to practice from an office in Scotland or Northern Ireland if you are:

(a)

a solicitor or REL sole practitioner who has held or received client money (overseas practice);

(b)

a lawyer-controlled body, or an REL-controlled body, which has held or received client money (overseas practice) as a firm (overseas practice);

(c)

a lawyer of England and Wales, an REL, a European lawyer registered with the BSB or a non-lawyer, who is a manager (overseas practice) of a lawyer-controlled body, or an REL-controlled body, which holds or receives client money (overseas practice);

(d)

a lawyer of England and Wales or REL who is a manager (overseas practice) of any other firm (overseas practice) which is controlled by lawyers of England and Wales and/or RELs, either directly as partners, members or owners, or indirectly by their ownership of bodies corporate which are partners, members or owners, if the firm (overseas practice) holds or receives client money (overseas practice);

(e)

a solicitor or REL who holds or receives client money (overseas practice) as a named trustee;

(f)

a lawyer of England and Wales, a European lawyer registered with the BSB or a non-lawyer, who is a manager (overseas practice) of a lawyer-controlled body, or an REL-controlled body, and who holds or receives client money (overseas practice) as a named trustee.

Dealings with client money

50.3

In all dealings with client money (overseas practice), you must ensure that:

(a)

it is kept in a client account (overseas practice), separate from money which is not client money (overseas practice);

(b)

on receipt, it is paid without delay into a client account (overseas practice) and kept there, unless the client has expressly or by implication agreed that the money shall be dealt with otherwise or you pay it straight over to a third party in the execution of a trust under which it is held;

(c)

it is not paid or withdrawn from a client account (overseas practice) except:

(i)

on the specific authority of the client;

(ii)

where the payment or withdrawal is properly required:

(A)

for a payment to or on behalf of the client;

(B)

for or towards payment of a debt due to the firm (overseas practice) from the client or in reimbursement of money expended by the firm (overseas practice) on behalf of the client; or

(C)

for or towards payment of costs due to the firm (overseas practice) from the client, provided that a bill of costs or other written intimation of the amount of the costs incurred has been delivered to the client and it has thereby (or otherwise in writing) been made clear to the client that the money held will be applied in payment of the costs due; or

(iii)

in proper execution of a trust under which it is held;

(d)

accounts are kept at all times, whether by written, electronic, mechanical or other means, to:

(i)

record all dealings with client money (overseas practice) in any client account (overseas practice);

(ii)

show all client money (overseas practice) received, held or paid, distinct from any other money, and separately in respect of each client or trust; and

(iii)

ensure that the firm (overseas practice) is able at all times to account, without delay, to each and every client or trust for all money received, held or paid on behalf of that client or trust; and

(e)

all accounts, books, ledgers and records kept in relation to the firm's (overseas practice) client account(s) (overseas practice) are preserved for at least six years from the date of the last entry therein.

Accountants' reports

50.4

You must deliver an accountant's report in respect of any period during which you or your firm (overseas practice) have held or received client money (overseas practice) and you were subject to rule 50.3 above, within six months of the end of that period.

50.5

The accountant's report must be signed by the reporting accountant, who must be an accountant qualified in England and Wales or in the overseas jurisdiction where your office is based, or by such other person as the SRA may think fit. The SRA may for reasonable cause disqualify a person from signing accountants' reports.

50.6

The accountant's report must be based on a sufficient examination of the relevant documents to give the reporting accountant a reasonable indication whether or not you have complied with rule 50.3 above during the period covered by the report, and must include the following:

(a)

your name, practising address(es) and practising style and the name(s) of the firm's (overseas practice) managers (overseas practice);

(b)

the name, address and qualification of the reporting accountant;

(c)

an indication of the nature and extent of the examination the reporting accountant has made of the relevant documents;

(d)

a statement of the total amount of money held at banks or similar institutions on behalf of clients and trusts, and of the total liabilities to clients and trusts, on any date selected by the reporting accountant (including the last day), falling within the period under review; and an explanation of any difference between the total amount of money held for clients and trusts and the total liabilities to clients and trusts;

(e)

if the reporting accountant is satisfied that (so far as may be ascertained from the examination) you have complied with rule 50.3 above during the period covered by the report, except for trivial breaches, or situations where you have been bound by a local rule not to comply, a statement to that effect; and

(f)

if the reporting accountant is not sufficiently satisfied to give a statement under (e) above, details of any matters in respect of which it appears to the reporting accountant that you have not complied with rule 50.3 above.

Rule 51: Production of documents, information and explanations

51.1

You must promptly comply with:

(a)

a written notice from the SRA that you must produce for inspection by the appointee of the SRA all documents held by you or held under your control and all information and explanations requested:

(i)

in connection with your practice; or

(ii)

in connection with any trust of which you are, or formerly were, a trustee;

for the purpose of ascertaining whether any person subject to Part 7 of these rules is complying with or has complied with any provision of this Part of these rules, or on whether the account has been used for or in connection with a breach of any of the Principles or other SRA Handbook requirements made or issued by the SRA; and

(b)

a notice given by the SRA in accordance with section 44B or 44BA of the LSA or section 93 of the LSA for the provision of documents, information or explanations.

51.2

You must provide any necessary permissions for information to be given so as to enable the appointee of the SRA to:

(a)

prepare a report on the documents produced under rule 51.1 above; and

(b)

seek verification from clients, staff and the banks, building societies or other financial institutions used by you.

51.3

You must comply with all requests from the SRA or its appointee as to:

(a)

the form in which you produce any documents you hold electronically; and

(b)

photocopies of any documents to take away.

51.4

A notice under this rule is deemed to be duly served:

(a)

on the date on which it is delivered to or left at your address;

(b)

on the date on which it is sent electronically to your e-mail or fax address; or

(c)

48 hours (excluding Saturdays, Sundays and Bank Holidays) after it has been sent by post or document exchange to your last notified practising address.

Guidance notes

(i)

If your firm has offices in and outside England and Wales, a single accountant's report may be submitted covering your practice from offices both in, and outside, England and Wales - such a report must cover compliance both with Parts 1 to 6 of these rules, and with Part 7 of these rules.

(ii)

The accounting requirements and the obligation to deliver an accountant's report in this part of the rules are designed to apply to you in relation to money held or received by your firm unless it is primarily the practice of lawyers of other jurisdictions. The fact that they do not apply in certain cases is not intended to allow a lower standard of care in the handling of client money - simply to prevent the "domestic provisions" applying "by the back door" in a disproportionate or inappropriate way.

(iii)

In deciding whether interest ought, in fairness, to be paid to a client, the fact that the interest is or would be negligible, or it is customary in that jurisdiction to deal with interest in a different way, may mean that interest is not payable under rule 49.2.

Rule 52: Waivers

52.1

The SRA may waive in writing in any particular case or cases any of the provisions of Part 7 of the rules, may place conditions on, and may revoke, any waiver.

Guidance note

(i)

Applications for waivers should be made to the Professional Ethics Guidance Team. You will need to show that your circumstances are exceptional in order for a waiver to be granted.