MEDICO LEGAL M A G A Z I N E
SRA PROPOSED CHANGE TO THE DEFINITION OF WHAT IS CLIENT MONEY. WHO BENEFITS? By Ben Elsom, Managing Director, Medical Reports Ltd
In short the Solicitors Regulation Authority (SRA) and administrators of firms in administration will benefit. The SRA recently launched a consultation on changes to the Solicitors Accounts Rules. Of particular significance to medico-legal organisations and solicitors is the proposed way that professional disbursements will be dealt with. The SRA has proposed that “Payments for professional services for which the firm is liable should in our view be treated as any other liability of the firm.” The SRA goes on to say that “We accept that the proposal removes some protections for those other than the clients (for example Counsel and other experts). We consider that these risks in relation to Payments for which the solicitor is liable are adequately addressed through clear duties to act in the client’s best interests.” So what might the potential impact on medico-legal companies be? 1. Medical report fees will become the responsibility of the firm and not the client. This will prevent medico-legal companies from recovering their fees ultimately from the client who had the benefit of the services provided or from the Solicitors Compensation Fund where the solicitors practice has misappropriated the money.
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Sp o n s o re d by:
2. In an intervention scenario the outstanding medicolegal fees will become part of the administration and when recovered will go into the general administration pot. Medico-legal companies will only get paid a tiny percentage of the fees with preferential creditors such as the SRA and the administrator using the fees recovered to get paid first! 3. Lenders will be less inclined to support medicolegal businesses as the risk of failure of a medico-legal company will be greatly increased. This will ultimately massively impact the availability to the consumer of deferred payment for medical fees, the commercial write off arrangements and introduce stringent risk control by medico-legal companies. The Solicitors Disciplinary Tribunal in 2015 heard 140 applications, of which 58% involved allegations of Solicitors’ Accounts Rules Breaches, Client Money:Improper utilisation, Misappropriation; Failures:Failure to pay counsel’s/agent’s fees (Source Solicitors Disciplinary Tribunal Annual Report). So what might the potential impact on Solicitors Practices be? 1. Cash flow:- Suppliers are unlikely to offer the same credit facilities to defer payment on the cases resulting
