Suppose a fee-earner wants to close a file, but there is a small client balance left over in client account (presumably, the fee-earner miscalculated the sums at some stage). In that situation, can you simply transfer the balance to a general or suspense client ledger?

The answer is that you cannot. The use of general (or suspense) client ledgers would be a breach of Rule 32, which requires that all client transactions must be recorded on the client’s side of a separate ledger account for each client. The only exception to this is the use of temporary suspense client ledgers where moneys are received and a small amount of time is needed to identify the nature of the payment, or the client on whose behalf the money has been received.

Transferring client money to a general (nominal) ledger would result in multiple breaches of SAR. Client moneys can only be withdrawn from a client account in the specific circumstances listed in r22 (which does not include transfer out of a general, nominal, ledger in those circumstances). Further breaches would arise as client’s money would then be held outside of the client bank account, and accounting for any further sums in lieu of interest would prove extremely difficult. Source: [2010] Legal Executive Journal January 38.