Part III Professional Practice, Conduct and Discipline of Solicitors

Powers of Council to intervene

42 Distribution of sums in client bank account.

(1)

Subject to the provisions of this section, where, in any of the events mentioned in subsection (2) F1or (2A), the sum at the credit of any client account kept by a solicitor F1or an F2incorporated practice F2authorised legal business (or where several such accounts are kept by him F1or, as the case may be, by it the total of the sums at the credit of those accounts) is less than the total of the sums received by him in the course of his practice on behalf of his clients F1or, as the case may be, by it on behalf of its clients and remaining due by him F1or, as the case may be, by it to them, then, notwithstanding any rule of law to the contrary, the sum at the credit of the client account (or where several such accounts are kept, the total of the sums at the credit of those accounts) shall be divisible proportionately among the clients of the solicitor F1or, as the case may be, the F2incorporated practice F2authorised legal business according to the respective sums received by him in the course of his practice on their behalf F1or, as the case may be, by it on their behalf and remaining due by him F1or, as the case may be, by it to them.

(2)

The events to which subsection (1) applies are in relation to any solicitor—

(a)

the sequestration of his estate;

(b)

the granting by him of a trust deed for F3behoof F3the benefit of creditors;

(c)

the appointment of a judicial factor on his estate.

F4(d)

the entering by the solicitor into a debt arrangement scheme within the meaning of Part 1 of the Debt Arrangement and Attachment (Scotland) Act 2002.

F5(2A)

The events to which subsection (1) applies are in relation to any F6incorporated practice F6authorised legal business—

F7(za)

the sequestration of its estate,

(zb)

the granting by it of a trust deed for the benefit of creditors,

(zc)

the entering by it into a debt arrangement scheme within the meaning of Part 1 of the Debt Arrangement and Attachment (Scotland) Act 2002,

(a)

the making of an administration or winding up order or the appointment of a provisional liquidator, liquidator, receiver or judicial factor; or

(b)

the passing of a resolution for voluntary winding-up (other than one passed solely for the purposes of reconstruction or amalgamation with another F8incorporated practice F8authorised legal business)

(3)

Where a solicitor F9or an F10incorporated practice F10authorised legal business keeps an account at a bank in his F9or, as the case may be, its own name F9or, as the case may be, by the F10incorporated practice F10authorised legal business in its own name for a specified client no regard shall be had for the purposes of this section to the sum at the credit of that account or to any sums received by the solicitor in the course of his practice on behalf of that client F9or, as the case may be, by the F10incorporated practice F10authorised legal business on that behalf and remaining due by him F9or, as the case may be, by it to that client, so far as these are represented by the sum at the credit of that bank account F11; nor shall any regard be had for such purposes to any—

(a)

deposit or share account with a. . . F12 building society; or

(b)

account showing sums on loan to a local authority,

being in either case an account kept by the solicitor in his own name F9or, as the case may be, by the F10incorporated practice F10authorised legal business in its own name for a specified client.

(4)

For the purposes of this section any reference to an account at a bank includes a reference to a deposit receipt at a bank.