Report this comment to a moderator

Law Soc advises on client money held in insolvent banks

Law Soc advises on client money held in insolvent banks The Practice Note could usefully have said rather more really in several respects. The analysis on liability in negligence is rather less than a complete picture and there are in any event about 6 other bases of potential liability, though there are releatively straightforward solutions to each, at least in relation to clients rather than third parties. On undertakings it says 'You should not attempt to limit your undertakings because acceptance by a buyer's solicitors of such a limited undertaking risks not discharging the seller's charge if the bank fails. This is not in the interests of clients. Any undertaking you cannot honour is a claim against you and your insurers.' Yet it it is not incumbent on solicitors to assume personal liability, simply because (a) that is in the best interests of clients and (b) solicitors are insured: guidance note 26 to rule 10 of the Code of Conduct says ‘You are not obliged to give or accept undertakings.’ We can no longer be sure our insurers will be good for the money in the event of a catastrpohic bank failure which would impact across an insurers' entire book of solicitor business, and in any event there are significant issues of aggregation, limits of indemnity and excesses.

10-Oct-2008

7:33 am