Cap. 159 sub. leg. F

Solicitors’ Accounts Rules(Cap. 159, section 73) [1 June 1965] L.N. 65 of 1965(Format changes—E.R. 2 of 2019) 1. Citation These rules may be cited as the Solicitors’ Accounts Rules. 1A. Principles A solicitor must—(a) comply with the requirements of rule 2 of the Solicitors’ Practice Rules (Cap. 159 sub. leg. H) as to the solicitor’s integrity, the duty to act in the client’s best interests, and the good reputation of the solicitor and the profession;(b) keep other people’s money separate from money belonging to the solicitor or the practice of the solicitor;(c) except when these rules specifically provide otherwise, keep other people’s money in a bank account identifiable as a client account which must include the words “client account (當事人帳戶)” in its title, bank statements and cheques;(d) use a client’s money for that client’s matters only;(e) use trust money that is subject to a trust of which the solicitor is a trustee for the purposes of that trust only;(f) establish and maintain proper accounting systems and proper internal controls over those systems to ensure compliance with these rules;(g) keep proper accounting records to show accurately the position with regard to the money held for each client and each trust;(h) account for interest on other people’s money in accordance with these rules;(i) co-operate with the Society in checking compliance with these rules; and(j) deliver annual accountant’s reports as required by the Ordinance.(L.N. 151 of 2012) 2. Interpretation In these rules, unless the context otherwise requires—client (當事人) means any person on whose account a solicitor holds or receives client’s money;client account (當事人帳戶) means, subject to rule 15, a current or deposit account at a bank located and licensed in Hong Kong in the name of the solicitor in the title of which the word “client” appears; (L.N. 151 of 2012)client’s money (當事人款項) 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 connexion with his practice as a solicitor, as agent, bailee, stakeholder, solicitor-trustee or in any other capacity, but not 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;disbursements (代墊付費用) means any sum spent or to be spent by a solicitor on behalf of the client or trust; (L.N. 151 of 2012)firm (律師行) means a sole practitioner or a partnership of 2 or more solicitors, carrying on the business of practising as a solicitor; (L.N. 151 of 2012)office money (律師行款項) means money held or received by a solicitor which is not client’s money, and to which the only person entitled is the solicitor himself or herself or, in the case of a firm of solicitors, one or more of the partners in the firm; (L.N. 151 of 2012)principal (主管) means a sole practitioner or partner of a firm and also includes any solicitor who is held out or holds himself or herself out as such a partner or sole practitioner; (L.N. 151 of 2012 and L.N. 185 of 2012)solicitor (律師) includes a solicitor of the Court, a firm of solicitors, a solicitor corporation, a foreign lawyer and a foreign firm; (L.N. 151 of 2012)solicitor-trustee (受託人律師) means a solicitor who is a sole trustee or who is co-trustee only with a partner, clerk or servant of his or with more than one of such persons; (L.N. 151 of 2012)trust money (信託款項) means money held or received by a solicitor which is not client’s money and which is subject to a trust of which the solicitor is a trustee, whether or not he is solicitor-trustee of such trust; (L.N. 151 of 2012) working day (工作日) means any day other than— (a) a general holiday; or (b) a gale warning day or black rainstorm warning day as defined in section 71(2) of the Interpretation and General Clauses Ordinance (Cap. 1). (L.N. 151 of 2012) 3. Obligation to pay into client account (1) Subject to the provisions of rule 9, a 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. (L.N. 162 of 1993) (2) For the purposes of this rule, a solicitor shall keep not less than one client account and may keep as many such accounts as he thinks fit. 4. Payment into client account 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 may by mistake or accident have been drawn from the account in contravention of rule 8(2); and (d) a cheque or draft received by the solicitor, which under rule 5 he is entitled to split but which he does not split. 5. Splitting Where a solicitor holds or receives a cheque or draft which includes client’s money or trust money of one or more trusts—(a) he may where practicable split such cheque or draft and, if he does so, he shall deal with each part thereof as if he had received a separate cheque or draft in respect of that part; or (b) if he does not split the cheque or draft, he shall, if any part thereof consists of client’s money, and may, in any other case, pay the cheque or draft into a client account provided that he must transfer all office money out of the client account within 14 days of receipt. (L.N. 151 of 2012) 6. Restriction on payment into client account No money other than money which under rules 3, 4 and 5 a solicitor is required or permitted to pay into a client account shall be paid into a client account. 6A. Interest on client account (1) Subject to paragraph (2), on each occasion when a solicitor holds or receives client’s money in respect of a particular matter, the solicitor must without delay deposit the money in a designated interest bearing client account and must account to the client for any interest earned on the account, failing which the solicitor must pay to the client a sum equivalent to the interest which would have accrued for the benefit of the client if the money had been deposited in a Hong Kong dollar savings account of The Hongkong and Shanghai Banking Corporation Limited.(2) A solicitor is only required to account to a client of the solicitor for any interest earned in accordance with paragraph (1) where the solicitor holds a sum of money in the amount specified in column 1 of the Schedule for a period which equals to or exceeds the period specified in column 2 of the Schedule opposite to that amount and the amount of interest accrued exceeds $500.(3) (a) Without prejudice to any other remedy available to a client who feels aggrieved that interest, or an equivalent sum, has not been paid to the client under these rules, the client is entitled to require the solicitor to obtain from the Council a certificate as to whether or not interest ought to have been earned for the client, and if so, the amount of interest.(b) After receipt of the client’s request for a certificate mentioned in subparagraph (a), the Council must cause the matter to be investigated and, if it determines that interest should have been earned for the client, issue a certificate to that effect setting out the amount of interest which should have been earned in accordance with these rules. (L.N. 151 of 2012 and L.N. 185 of 2012)(c) On the issue of the certificate, the sum certified on that certificate to be due is payable by the solicitor to the client.(4) Subject to paragraph (5), nothing in these rules is to—(a) affect any agreement in writing whenever made between a solicitor and a client of the solicitor as to the application of the client’s money or interest on the money;(b) apply to money received by a solicitor, being money subject to a trust of which the solicitor is a trustee; or(c) affect any agreement in writing for payment of interest on money held by the solicitor as a stakeholder.(5) Any arrangement made to the effect that no interest is payable in respect of money deposited with a solicitor is void.(6) A solicitor who deposits client’s money in accordance with paragraph (1) is entitled to charge the client and be paid a sum that is fair and reasonable by way of an administration charge in respect of the work undertaken in the deposit and withdrawal of money and accounting to the client for the interest earned on the money.(7) The Council may, on prior written application, suspend or waive the operation of this rule taking into consideration the prevailing interest rate and the costs associated with the administration of this rule.(L.N. 151 of 2012) 7. Drawings from a client account There may be drawn from a client account—(a) in the case of client’s money—(i) money properly required for a payment to or on behalf of the client; (ii) money properly required 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; (iii) money drawn on the client’s authority; and (iv) money properly required for or towards payment of the solicitor’s costs where a bill of costs or other written intimation of the amount of the costs incurred has been delivered to the client and the client has been notified that money held for him will be applied towards or in satisfaction of such costs; (b) in the case of trust money, including money held by the solicitor as solicitor-trustee—(i) money properly required for a payment in the execution of the particular trust; and (ii) money to be transferred to a separate bank account kept solely for the money of the particular trust; (c) such money, not being money to which either paragraph (a) or (b) applies, as may have been paid into the account under rule 4(b) or (d); and (d) money which may by mistake or accident have been paid into the account in contravention of rule 6: Provided that in any case under paragraph (a) or (b) the money so drawn shall not exceed the total of the money held for the time being in such account on account of such client or trust. 7A. Authority required for drawing money from client account (1) No money shall be drawn from a client account under rule 7 unless the withdrawal has been specifically authorized in writing by— (L.N. 151 of 2012)(a) the solicitor in whose name the client account is kept or, where the client account is kept in the name of a firm, any solicitor, partner, consultant or foreign lawyer in the firm;(b) a certified public accountant (practising) as defined by section 2(1) of the Accounting and Financial Reporting Council Ordinance (Cap. 588), and countersigned by a person referred to in subparagraph (a); or (23 of 2004 s. 56; L.N. 66 of 2022)(c) a person approved by the Council, which approval shall only be given in exceptional circumstances, upon an application in writing made to it by the solicitor or firm and subject to such conditions as the Council may think fit, if any, and countersigned by a person referred to in subparagraph (a). (L.N. 151 of 2012)(2) Paragraph (1) shall not apply to the transfer of money from one client account to another client account at the same bank.(3) The Council may, on prior written application, suspend or waive the operation of this rule as required for the drawing of money from client account. (L.N. 151 of 2012)(L.N. 231 of 2000) 8. Further restrictions on drawings from client account (1) No money drawn from a client account under rule 7(a)(ii) or (iv), (c) or (d) shall be drawn 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. (2) No money other than money permitted by rule 7 to be drawn from a client account shall be so drawn unless the Council, upon an application in writing made to it by the solicitor, specifically authorizes in writing its withdrawal. (52 of 1980 s. 2) 9. Exceptions (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 which—(a) is received by him in the form of cash and is without delay paid in cash in the ordinary course of business to the client or to a third party; or (b) is received by him in the form of a cheque or draft which is endorsed over in the ordinary course of business to the client or to a third party and is not passed by the solicitor through a bank account; or (c) he pays into a separate bank account opened or to be opened in the name of the client or of some person named by the client. (2) Notwithstanding the provisions of these rules, a solicitor shall not pay into a client account client’s money held or received by him which—(a) the client for his own convenience requests the solicitor to withhold from such account; or (b) is received by him 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) is paid to him expressly— (L.N. 151 of 2012) (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; or (ii) as an agreed fee if a bill has been delivered. (L.N. 151 of 2012) (2A) On receipt of any payment which includes disbursements as well as client’s money of the nature described in paragraph (2), a solicitor must—(a) determine the composition of the payment without delay;(b) for any part of the payment that is for disbursements anticipated but not yet incurred, pay that part of the payment into the client account without delay; and(c) for any part of the payment that is for disbursements incurred but not yet paid, either—(i) pay that part of the payment into the client account without delay; or(ii) pay it into the office account and settle the disbursements in any event not later than the 4th working day following the receipt from the client, failing which the payment must be paid into the client account not later than the 5th working day following the receipt. (L.N. 151 of 2012 and L.N. 185 of 2012)(3) Where a cheque or draft includes other client’s money as well as client’s money of the nature described in paragraph (2), such cheque or draft shall be dealt with in accordance with rule 5. (4) Notwithstanding the provisions of these rules, the Council, upon an application in writing made to it by a solicitor, may specifically authorize the solicitor in writing to withhold any client’s money from a client account. (52 of 1980 s. 2) 9A. Duty to remedy breaches (1) Any breach of these rules must be remedied promptly upon discovery. This includes the replacement of any money improperly withheld or withdrawn from a client account. [cf. Solicitors’ Accounts Rules 1998 r. 7(1) U.K.](2) Each principal of a firm shall be jointly and severally liable to carry out the duty to remedy any breach of these rules. This duty extends to replacing missing client’s money or trust money from the principal’s own resources, even if the money has not been misappropriated by the principal himself, and whether or not a claim is subsequently made on the fund established under rule 3 of the Solicitors (Professional Indemnity) Rules (Cap. 159 sub. leg. M). (E.R. 2 of 2019) [cf. Solicitors’ Accounts Rules 1998 r. 7(2) U.K.](3) (Repealed L.N. 151 of 2012)(L.N. 18 of 2002) 10. Obligation to keep accounts (1) Every solicitor shall at all times keep properly written up such books and accounts as may be necessary—(a) to show all his dealings with—(i) clients’ money held, received or paid by him; and(ii) any other money dealt with by him through a client account; and (b) to distinguish such money held, received or paid by him on account of each separate client and to distinguish such money from other money held, received or paid by him on any other account. (2) All dealings referred to in paragraph (1)(a) shall, within 3 working days after the date of such dealings, be recorded in— (L.N. 306 of 1979)(a) a clients’ cash book, or a clients’ column on the credit side or debit side, as may be appropriate, of a cash book; and (b) a clients’ ledger, or a clients’ column on the credit side or debit side, as may be appropriate, of a ledger, and no other dealings shall be recorded in such clients’ cash book and ledger, or, as the case may be, in such clients’ columns. (3) All dealings of the solicitor relating to his practice as a solicitor other than those referred to in paragraph (1)(a) shall, before the end of the month following the month in which the dealings were carried out, be recorded in a separate cash book and ledger or in separate columns of a cash book and ledger. (L.N. 306 of 1979) (4) In addition to the books and accounts referred to in paragraphs (2) and (3), every solicitor shall keep a record of all bills of costs, distinguishing between profit costs and disbursements, and of all written intimations under rule 7(a)(iv) delivered 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. (5) In this rule each of the expressions “book”, “ledger” and “record” shall be deemed to include a loose-leaf book and any cards or other permanent documents or the information stored in a computer and retrievable in a permanent and visible form, that are necessary for the operation of a mechanical or computerized system of book-keeping. (L.N. 151 of 2012 and L.N. 185 of 2012)(5A) If books, ledgers or records are kept by a computerized accounting system, every solicitor must ensure that—(a) the computer system has enough capacity and back-up capability to record the information required to be kept under these rules; and(b) the computer system is backed up at least once a month. (L.N. 151 of 2012)(6) Every solicitor shall preserve for at least 6 years from the date of the last entry therein all books, accounts and records kept by him under this rule. (6A) Subject to paragraph (8), the books and accounts, ledgers and records kept by a solicitor under this rule must be kept in Hong Kong. (L.N. 18 of 2002)(7) Notwithstanding paragraph (1), the Council may specifically exempt a solicitor from such of the provisions of this rule as relate to clients’ money, upon receipt by it of an application for such exemption, made in writing and containing an undertaking not to carry out any dealings with clients’ money. (L.N. 306 of 1979; 52 of 1980 s. 2)(8) Notwithstanding paragraph (6A), the Council may specifically exempt a foreign lawyer from that paragraph upon such conditions as it thinks fit. (L.N. 18 of 2002) 10A. Reconciliations A solicitor who holds or receives clients’ money or pays money into client accounts must—(a) at least once a calendar month compare the balance shown on clients’ cash book with the total of—(i) the balances shown on the statements and passbooks (after allowing for all unpresented items) of all client accounts and of any account which is not a client account but in which the solicitor holds client’s money under rule 9(2)(a); and(ii) any client’s money or trust money held by the solicitor in cash; and(b) as at the same date when he makes a comparison pursuant to paragraph (a)—(i) prepare a listing of all the balances shown by the clients’ ledgers of the liabilities to clients (and other persons, and trusts), and compare the total of those balances with the balance shown on the clients’ cash book; and(ii) prepare a reconciliation statement, which must show the cause of the difference, if any, shown by each of the comparisons referred to in subparagraph (i) and paragraph (a).[cf. Solicitors’ Accounts Rules 1998 r. 32(7) U.K.] (L.N. 18 of 2002) 11. Powers of Council (1) In order to ascertain whether the provisions of these rules have been complied with, the Council, acting either—(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 such time and place as may be fixed by the Council, his books of account, management accounts including monthly profit and loss accounts, 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 such person shall be directed to prepare for the information of the Council a report on the result of such inspection and any such report may be used as a basis for proceedings under the Ordinance. (L.N. 151 of 2012)(2) Upon being required so to do a solicitor shall produce such books of account, management accounts including monthly profit and loss accounts, bank pass books, loose-leaf bank statements, statements of account, vouchers and documents at the time and place fixed. (L.N. 151 of 2012)(3) Before instituting an inspection on a written complaint lodged with it by a third party, the Council shall require prima facie evidence that a ground of complaint exists, and may require the payment by such 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 and the Council may deal with any sum so paid in such manner as it thinks fit. (4) The Council may make such order for the payment of the costs of any inspection required by the Council under this rule as it thinks fit. (L.N. 306 of 1979) (52 of 1980 s. 2) 12. Delivery of written intimation etc. (L.N. 151 of 2012 and L.N. 185 of 2012)A written intimation of the amount of a solicitor’s costs incurred and a notification to a client that money held for him will be applied as mentioned in rule 7(a)(iv) may be delivered to a client in the same manner as a bill of costs is required to be delivered under section 66(2) of the Ordinance. 13. Requirement by Council Every requirement to be made by the Council of a solicitor under these rules shall be made in writing under the hand of the Secretary and sent by registered post to the last address of the solicitor notified to the Society and, when so made and sent, shall be deemed to have been received by the solicitor within 48 hours of the time of posting. (52 of 1980 s. 2) 14. Saving of rights of solicitor Nothing in these rules shall deprive a solicitor of any recourse or right, whether by way of lien, set-off, counter-claim, charge or otherwise, against moneys standing to the credit of a client account. 15. Waiver The Council may, on prior written application, waive in writing the provision relating to the location of a client account subject to the conditions that it may impose.(L.N. 151 of 2012) Schedule [rule 6A]Interest on Client Account Amount Period Exceeding $3,000,000 4 working days Exceeding $250,000 but not exceeding $3,000,000 2 weeks Exceeding $100,000 but not exceeding $250,000 4 weeks Exceeding $50,000 but not exceeding $100,000 8 weeks (Schedule added L.N. 151 of 2012)