Firms will often hold money on behalf of clients and usually client money will be used in the process of carrying out the matter. 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.
The SRA provides a framework within which you can deal with money you are unable to return to the rightful owner. See Practice Note: Residual balances—law firms and How to manage a residual balances project.
Requirements relating to residual balances can be found in rules 2 and 5 of the Accounts Rules:
rule 2.5 contains a requirement to return money promptly to the client
rule 5.1(c) covers the situation where you need to withdraw the client's money from your client account in circumstances where you have not been able to do so, ie residual balances
See Practice Note: Residual balances—law firms—SRA Accounts Rules 2019.
You must ensure client money...
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