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Bar Council seeks to tighten rules on handling of clients’ money PDF Print E-mail
Monday, 11 June 2007 07:59am

Bar Council seeks to tighten rules on handling of clients’ money©The Star (Used by permission)

KUALA LUMPUR: Under a proposed move to tighten the rules governing handling of clients' accounts, lawyers may soon find it hard to withdraw money from these accounts.

The Bar Council's conveyancing practice committee chairman Roger Tan said the move was aimed at curbing incidences of fraud.

He said his committee was working with the Legal Profession Committee to propose amendments to the Solicitors Accounts Rules 1990, which were drawn up under the Legal Profession Act 1976. 

Among the changes being looked at include:

· PROHIBITING lawyers from issuing cash or bearer cheques or drawing money from their clients’ accounts via ATMs or online banking services;

· REQUIRING lawyers to issue only account payee cheques;

· INTRODUCING a two-signatory rule for withdrawals from the clients’ account if it exceeds a certain limit;

· WHETHER a sole proprietor is required to hire a bookkeeper to comply with the two-signatory rule; and

· ONLY a partner of a firm may sign a cheque to withdraw money from the clients’ account.

Tan said the Bar Council was always conscious of its responsibility to protect the public against errant lawyers and the maintenance of public confidence in the lawyers who hold their clients’ money as stakeholders or trustees.

Among the situations where lawyers hold clients' money as stakeholders are when property purchasers pay the balance amount for the property they are purchasing to the lawyer to enable their loans to be released, and when lawyers collect the 10% deposit from clients when the sale and purchase agreement is signed.

The House Buyers Association lauded the move as it came in the wake of reports that more than 100 lawyers were wanted by police regarding investigations into criminal breach of trust cases.

The association's secretary-general, Chang Kim Loong, said the proposed changes were good as they made the whole process a lot more transparent.

Chang said it was also necessary to ensure that if two partners in a firm with multiple partners colluded to cheat, the firm had to be held responsible.

He added that ensuring young lawyers were educated in managerial and accounting practices would also curb instances of cheating.

Comments (5)Add Comment
Good Move
written by Nicole Tan Lee Koon, Monday, June 11 2007 11:22 am

This is certainly a timely move to alleviate all the fears caused by the recent reports of CBT cases involving lawyers. However, this sole proprietor issue should be handled with care as there are many sole proprietors who are reputable and trustworthy. Perhaps, it is better for the clients to make a choice between using a partnership and a sole proprietor, taking into consideration of what risk they are going to take and so on and so forth. For eg, a sole proprietor who has more than 40 years of experience would be much better than a new partnership.

Nicole Tan Lee Koon

Any Exceptions To The Moves
written by Ng Hong Chai, Monday, June 11 2007 02:29 pm

I do hope that whoever is drawing up the proposed Rules should think of coming up with the exceptions as well. One obvious example, with due respect, is to give exemptions to a retired Judge who wishes to open a sole proprietorship, from such rules as requiring a book-keeper to countersign a clients' account cheque. It would be an insult to such a retired Judge to be subjected to the control of a lay person.

Ng Hong Chai

LIMITED EXPERIENCE SHARED
written by Stephen Tan Ban Cheng, Monday, June 11 2007 08:18 pm

Let me just comment on the five proposals, one by one, and share my limited experience before I try and give my view on Hong Chai's "exception."

(1) PROHIBITING lawyers from issuing cash or bearer cheques or drawing money from their clients’ accounts via ATMs or online banking services;

Comments (A): When I opened my clients' account, my bank manager who is a good old friend of more than 30 years standing and who has since retired told me never to issue CASH cheques. He also said Clients' Accounts are not entitled to ATM cards. So I opened a personal A/C and even though issued with the ATM card, I have never used it at all because somehow it never worked for me!

I have issued bearer cheques and the bearers have been able to cash the same upon presentation after I had struck out and endorsed the A/C PAYEE stamp printed on the cheques.

• REQUIRING lawyers to issue only account payee cheques;

Comments (B): See Comments (A) above.

• INTRODUCING a two-signatory rule for withdrawals from the clients’ account if it exceeds a certain limit;

Comments (C): How does one do that? Assuming that the rule states that amounts over RM30,000 require two signatures and assuming that I have to issue a RM45,000 cheque, to avoid that, I will just issue two cheques totalling the RM45,000. At the end of the day, we must leave this matter to the tyranny of our "small voice"!

• WHETHER a sole proprietor is required to hire a bookkeeper to comply with the two-signatory rule; and

Comments (D): As a one-man show, the cost of compliance may prove prohibitive. So I will call upon those laying down the rule to think about compliance costs, unless they can come out with a scheme where one-man operators share the same book-keeper.

• ONLY a partner of a firm may sign a cheque to withdraw money from the clients’ account.

Comments (E): I believe this is a fair rule. Even big firms have a rule that not all partners can sign cheques. This is a control mechanism involving a function with a lot of responsibility.

Finally, the point made by my Johore friend, Ng Hong Chai. I beg to differ. I have nothing against Judges or former Judges. What separates them from we lawyers is their appointment to and acceptance of the job on the Bench. Once they retire, they return to the same position if they want to practise. This means they are simply subject to the same rules, whatever these are.

If we were to adopt Hong Chai's proposal, then we might as well have another class of members for the Malaysian Bar. Can we do that without breaching the basic principles of equality and fellowship? If the answer is yes, then proceed. If the answer is in the negative, then desist.

Stephen Tan Ban Cheng

Is regulation really the answer?
written by Shanmuga Kanesalingam, Monday, June 11 2007 09:29 pm

I am always sceptical about increasing regulation to curb these sorts of excesses. As Stephen has rightly pointed out, such regulations can always be avoided. Why is there more dishonesty? Because of the general culture of corruption that pervades our society now. The general increase in the cost of living, coupled with the reduction of fee income, and the proliferation of lawyers. We need to spend more money, yet earn less money and have to compete with more people. Whilst an honest man full of integrity and of a high and noble character will resist temptation no matter how desperate, how many of us are really like that? About as many as have given a tip to a land office clerk to expedite a land transaction? As many as have tipped a court clerk to get a document out quickly? The bad hats will always be bad hats, no matter how much regulation we have. More regulation will create even more work for honest lawyers, whilst dishonest lawyers will still evade, avoid and ignore the rules.

Shanmuga Kanesalingam

Composition of Partnerships
written by Ng Hong Chai, Tuesday, June 12 2007 08:17 pm

I am just wondering if a partnership of husband and wife, father or mother and son or daughter be allowed, if partnership is made a necessary condition to practice, particularly in the field of conveyancing. In my humble opinion, such partnerships could be more dangerous than sole proprietorships. Could anybody enlighten me?

Ng Hong Chai


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Seminar on the Fundamentals of Conveyancing (24 Feb 2012)
Organised by the Kuala Lumpur Bar Professional Development Committee, this seminar featuring Jeremiah R Gurusamy will take place at 3:00 pm, at the Kuala Lumpur Bar Auditorium, on 24 Feb 2012 (Friday). Click on the link above for more details.
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