What are the rules around client money and client accounts?

• A. Client funds can be held in the solicitor's personal account
• B. Client funds must be held separately in designated client accounts with proper accounting and safeguarding
• C. Client funds can be pooled with the firm's general funds
• D. Cash kept on the desk is sufficient

Answer: (B)

Client money must be held in trust, separate from the solicitor’s own funds and the firm’s money, in designated client accounts with strict accounting and safeguarding. This separation protects the money for the client, makes it possible to track and reconcile each sum for each client, and ensures proper controls so the funds aren’t used for the firm’s purposes or at risk if the firm encounters financial trouble. The rules require clear records, regular reconciliations, and safeguards around how the money is handled and how interest (if any) is dealt with.

Holding client funds in a solicitor’s personal account would mix personal and client money and breach trust rules. Pooling client money with the firm’s general funds would blur ownership and control, which the rules prohibit. Keeping cash on the desk is insecure and untidy from an accounting and safeguarding perspective.