SRA changes rules on charitable donations

The SRA has agreed to raise the amount law firms can donate to charity from unclaimed client account balances, from £50 to £500.

Under Rule 20.1(k) money may be withdrawn from individual client accounts and paid to a charity if all efforts to locate the client have failed. The charity must provide an indemnity against a claim being made later if, for example, the client remerges and demands the donated money.

Previously firms were able to donate up to £50 to their preferred charity in this way without prior SRA approval. This rule change is good news for charities, such as the Solicitors Benevolent Association (SBA), which gives financial assistance to solicitors who are in need.

Sue Ellis, marketing and membership executive at the SBA, commented: "As the profession's own charity, run by and for solicitors, SBA knows exactly how much of a burden unclaimed balances can be so any lightening in regulation by the SRA is really most welcome."

The SBA hope that many more firms will take advantage of this change in the rules to clear historic client accounts and benefit colleagues in crisis by donating this money.

Ellis added: "It's important for firms to have complete confidence that the sums they pass on to charities can be refunded, as and when they are ever reclaimed. This is why SBA doesn't actually spend old client balances. Instead, we recycle them to make interest free, secured loans to solicitors and their families in need. It's an expedient and satisfying way to put dormant funds to work where they can really do some good."

The Access to Justice Foundation, which raises funds by asking firms to donate their unclaimed client account balances to them through their 'It’s Not Just Peanuts' campaign, has been helping firms donate their dormant accounts since 2012. This includes providing an indemnity in accordance with SRA rules, to ensure firms are covered should a balance be reclaimed.

Ruth Daniel, chief executive of the Access to Justice Foundation, which channels funds raised back into the free legal advice sector, enabling thousands of vulnerable people to access justice through free legal services, said: “We are delighted that law firms can see the natural fit for funds that their clients had earmarked for their own access to the legal system, to then be used to enable others to access justice.” 

The new rules come in to effect from 31 October 2014.