9 months – and counting!

January 31, 2013 Posted by Lynne Moffatt

The Law Society of Scotland Accounts Rules amendments commenced on 1st November, 2011. This introduced Rule 6.11.1 – dealing with client balances at the conclusion of a matter. 2 months is the suggested ‘time limit’ to clear a ledger.

The intention is that small client balances are dealt with timeously – they no longer remain on ledgers and client trial balance reports for years, as some have in the past. There are many benefits. For years, I have urged many a client to do their house-keeping regularly – it’s much easier to see the wood from the trees which reduces the risk of ‘missing a balance’ – ultimately an indication that deeds have not been sent for recording, or stamp duty has not been paid on time!

What about client balances I have had for years?
The Law Society understood that with the introduction of a suggested ‘time limit’, firms now faced a mammoth and virtually impossible task to clear balances they might have had for years by 31st December 2011.  They therefore added Rule 6.11.2 to clarify – existing balances (of concluded matters) held at 31st October 2011 would not be subject to the 2 month ‘time limit’, and firms would have a much more reasonable 2 years to deal with the old balances appropriately.

Time marches on and many firms might have forgotten about their responsibility here. 9 short months until deadline.

Of course, any new balance for a matter concluded since 1st November 2011 automatically falls under 6.11.1 and should be dealt with within 2 months (unless you can demonstrate, and have documented a reason to retain the funds).

The Law Society have issued guidance on how to deal with balances appropriately, at the conclusion of a matter. Useful guidance – ‘Sums between £10 and less than £50’ in LSS guidance, and ‘Sums of £50 and more

Practically, how can my client balances be managed?
As the old balances disappear it will become much more manageable to keep on top of new balances. Still, it could be an enormous task to review ALL balances regularly.

If you use QuickBooks as your Legal Accounts Software Solution, you can easily identify which ledgers you should focus on or be concerned about.

Here follows a short video to help you with this.