Q. My reporting accountant says I must follow the guidelines on accounting procedures and systems set out at appendix 3 of the Solicitors Accounts Rules 1998. Is this correct?

A. The guidelines were drawn up to help solicitors comply with the accounts rules and are advisory rather than mandatory. Solicitors must have suitable procedures and systems in place to enable them to comply fully with the accounts rules. Solicitors are permitted to depart from the guidelines, but it would be a breach of rule 29 if they depart from the guidelines and cannot justify that departure.


The reporting accountant does not carry out a detailed check for compliance, but has a duty to report on any substantial departures from the guidelines discovered while carrying out work in preparation of the accountant's report. When reporting a substantial departure from the guidelines, it would be helpful if the reporting accountant were to quote the firm's justification for that departure.




Q. I am a conveyancing solicitor, and have given an undertaking to the mortgagees either to discharge their charge on the property at completion, or to return the deeds to the lender on demand. Have I entered into a retainer with the mortgagee?


A. The mortgagee is not your client if all you have done is to give an undertaking for the deeds. It cannot be the case that a solicitor has a retainer with everyone to whom an undertaking is given. Clearly, everything depends on the individual facts, and there may be more than a 'bare' undertaking that might give rise to a retainer. But it is unlikely that there is a retainer simply where an undertaking has been given.




Question of ethics is compiled by the Law Society's professional ethics guidance team. Send questions for publication to Austin O'Malley, the Law Society, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch; tel: 020 7242 1222