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Your firm receives a cheque from your client, Mr. Williams, for £1,000.00 on account of costs. You pay the money into the client bank account.
What do the rules say in respect of drawing against uncleared cheques?
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The correct answer is E. The SRA Accounts Rules do not explicitly prevent drawing against uncleared cheques, but guidance note (iii) to Rule 20 advises solicitors to use discretion. If the cheque is not honoured, it could result in using other clients' money, which would breach the rules. Therefore, while there is no prohibition, solicitors must be cautious and may mitigate risk by instructing the bank to charge any unpaid credits to their office or personal account.
Key Point: Drawing against uncleared cheques requires careful consideration and discretion to avoid breaching the rules. Solicitors must ensure that client funds are protected and not inadvertently used to cover unpaid cheques, thereby maintaining compliance with SRA regulations.
Option A is incorrect because there is no absolute prohibition against drawing against uncleared cheques.
Options B, C, and D are incorrect because the SRA Accounts Rules do not specify a mandatory waiting period before drawing against uncleared cheques.
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