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About Practice Compliance

Every law firm has a legal duty to comply with the SRA Handbook and a raft of other legislation and regulations. Get it wrong and you personally face investigation, disciplinary action, fines and prosecution (not to mention the damage to your reputation).

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SRA Handbook

Every law firm has a legal duty to comply with the SRA Handbook and a raft of other legislation and regulations. Get it wrong and you personally face investigation, disciplinary action, fines and prosecution.

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Associated legal terms

Authorised non-SRA firm

This is a term which is defined in the SRA Code of Conduct [2011] for the purposes of the SRA Handbook [2011] as meaning a firm which is authorised to carry on legal activities by an approved regulator other than the SRA.

Client money

Money which is held or received for a client or as a trustee.

Residual balance

Firms will often hold money on behalf of clients and, usually, client money will be used in the process of carrying out the matter or returned to the client. However, this is not always the case and sometimes there will be money left over in circumstances where the client has become untraceable or where it has not been possible to return the money to the client. This is a residual balance. Residual balances can arise for a number of reasons, including: • balances inherited on a merger with another firm • client (in)action, eg cheques that have been sent to the rightful owner but never cashed by them, clients who will not provide instructions on how to deal with the balance, clients who have died where the executors or family are unknown and clients who have simply disappeared and cannot be traced • retention money that has remained unclaimed • post-transaction credits—historically some practice management systems permitted the accounts team to reopen an archived file, post credits and cheques not presented and then close it again—this may then not be reported on and even if it is, it can be difficult to engage your fee earners if balances were at zero when they last had physical custody of the file • poor housekeeping, eg untidy bookkeeping, inefficient accounting systems, or incorrect application of disbursements
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