Page 259 - IOM Law Society Rules Book

ADVOCATES ACCOUNTS RULES 2008

account (for interest on client money, see rule 24(3)(e); for interest on
controlled trust money; see rule 24(7));

(c) money to replace any sum in accordance with note (viii) to Rule 22 or which
for any reason has been drawn from the account in breach of rule 22; the
replacement money becomes client money or controlled trust money on
payment into the account; and

(d) a sum in lieu of interest which is paid into a client account for the purpose of
complying with rule 24(2) as an alternative to paying it to the client direct;

and except when the rules provide to the contrary.

Notes
(i) See rule 13 and notes for the definition and examples of client money and controlled trust
money.
(ii) “Without delay” is defined in rule 2(2)(bb).
(iii) Exceptions to rule 15(1)(client money and controlled trust money must be paid into a
client account) can be found in:
(a) rule 9 – liquidators, trustees in bankruptcy, Mental Health Act receivers and
trustees of occupational pension schemes;
(b) rule 10 – joint accounts;
(c) rule 16 – client’s instructions;

(d) rules 17 and 18 – cash paid straight to client, beneficiary or third party;
• cheque endorsed to client, beneficiary or third party;
• controlled trust money paid into an account which is not a client account;
(e) rule 19(1)(b) – receipt and transfer of costs;
(f) rule 21(1) – payments of Legal Aid Costs from the Treasury.
(iv) Rule 15(2)(a) to (d) provides for exceptions to the principle that only client money and
controlled money may be paid into a client account. Additional exceptions can be
found in:
• rule 19(1)(c) - receipt and transfer of costs;
• rule 20(2)(b) – receipt of mixed payments;
(v) Only a nominal sum will be required to open or maintain an account. In practice, banks
will usually open (and, if instructed, keep open) accounts with nil balances.
(vi) Rule 15 allows controlled trust money to be mixed with client money in a general client
account. However, the general law requires an advocate to act in the best interests of
a controlled trust and not to benefit from it. The interest rules in Part C do not apply to
controlled trust money. An advocate’s legal duty means that the advocate must obtain
the best reasonably obtainable rate of interest, and must account to the relevant
controlled trust for all the interest earned, whether the controlled trust money is held in
a separate designated client account or in a general client account. To ensure that all
interest is accounted for, one option might be to set up a general client account just for
controlled trust money. When controlled trust money is held in a general client account,
interest will be credited to the office account in the normal way, but all interest must be
promptly allocated to each controlled trust – either by transfer to the general client
account, or to separate designated client account(s) for the particular trust(s), or by
payment to each trust in some other way.

Rule 15 – Use of a client account page 16