The Law Society's rules and statutory requirements for handling client or other third-party funds lay down stringent guidelines about the management of clients' funds. Your bankers should be able to help generate methods to meet these with a minimum of administration on your part.
We believe the bank's main consideration should at all times be client liaison and building the partnership's business; any administration functions that can be streamlined or simplified, should be.
A starting point is to obtain a service which will give you information when you require it. Monthly statements only provide historic data and arranging more frequent statements to allow full reconciliation may prove to be a costly exercise.
With this in mind a larger firm may wish to consider an electronic desk-banking service, available to any practice with an IBM-compatible PC. Not all banks provide this but those that do can offer the lawyer up-to-the-second information and the ability instantly to authorise transactions in the UK. This means that from your office you can move monies from one account to another, generate statements, initiate payments and access information on base rates.
This kind of technology can save legal businesses valuable time and provide a more efficient service to the client. But most importantly, it enables you to meet the requirement to provide accurate and timely records of your accounts.
Given that many of your clients will be financially astute and will demand that a competitive rate of interest is paid on funds left in your charge, it is similarly in your interest to deposit funds in a high interest deposit account.
Useful account packages are now available from banks and building societies. Some banks even allow the aggregation of separate client accounts to achieve higher interest payments. For example, £100 in one client's account can be notionally combined with another holding £100,000 in order to enjoy the higher interest levels.
To reinforce this benefit, some banks will pay interest on deposits quarterly rather than annually. This compounding means you will be earning interest on interest.
Use the available resources whichever system you choose to put in place. Whether in-house or outsourced, you should approach your bank manager first and enquire about the bank's services for law firms. It is important that you are in a position to conduct financial transactions efficiently, retaining full control of the funds in your care, but without creating unnecessary burdens on the accounts staff.
The needs of every business are different, but with the range of services now provided by banks and building societies, a law firm should be able to find one which will provide the right framework for it to flourish and enhance the service that it provides.