25. Given the complexity of this arrangement, particularly for unsophisticated clients, the barrister should only entering into such an arrangement if: (1) it is reduced to writing as part of the initial terms of that barrister's engagement; (2) the barrister also orally explains the arrangement. The latter is important even for sophisticated clients, given the possibility that they will simply believe that the arrangement is the same as taking money on account; and (3) the barrister reasonably believes that the client has understood the proposed arrangement. 26. Barristers must also be aware that any fixed, up-front fee must itself be able to be justified under the Standard referred to in paragraph 16 above, without reference to the barrister's collateral obligation to pay money to the client. Alternative arrangements 27. Barristers who are concerned with being able properly to explain the arrangement discussed in this guidance could consider a simpler variant: (1) charging a fixed, up-front, fee; and (2) agreeing that once the fee which would have been due on a time-charging basis exceeds that fee, then the client will pay on whatever further basis as may be agreed between them (for example, on a time-charging basis, with or without any cap on total fees). 28. To be acceptable to clients, it is likely that the fixed component will have to be smaller than it could potentially be with the principal arrangement dealt with in this guidance (since there is no provision for the barrister to pay anything to the client). However it does still provide the barrister with a certain level of protection against unpaid fees. 29. In the future, arrangements may be able to be made for an appropriate third party to hold funds on escrow (or as stakeholder) for both barrister and client, so that the barrister can get the commercial benefit of moneys being held on account without being constrained by the client money prohibition. However this is very much work in progress and raises a plethora of regulatory concerns which would have to be addressed first. [1] The same sort of arrangement could be (and perhaps is) also made in relation to disbursements which a barrister may have to incur on behalf of clients. [2] The hourly charging rate must also be agreed as part of this limb of the arrangement. First issued: January 2012 Standards Committee Bottom of Form
25. Given the complexity of this arrangement, particularly for unsophisticated clients, the barrister should only entering into such an arrangement if: (1) it is reduced to writing as part of the initial terms of that barrister's engagement; (2) the barrister also orally explains the arrangement. The latter is important even for sophisticated clients, given the possibility that they will simply believe that the arrangement is the same as taking money on account; and (3) the barrister reasonably believes that the client has understood the proposed arrangement. 26. Barristers must also be aware that any fixed, up-front fee must itself be able to be justified under the Standard referred to in paragraph 16 above, without reference to the barrister's collateral obligation to pay money to the client. Alternative arrangements 27. Barristers who are concerned with being able properly to explain the arrangement discussed in this guidance could consider a simpler variant: (1) charging a fixed, up-front, fee; and (2) agreeing that once the fee which would have been due on a time-charging basis exceeds that fee, then the client will pay on whatever further basis as may be agreed between them (for example, on a time-charging basis, with or without any cap on total fees). 28. To be acceptable to clients, it is likely that the fixed component will have to be smaller than it could potentially be with the principal arrangement dealt with in this guidance (since there is no provision for the barrister to pay anything to the client). However it does still provide the barrister with a certain level of protection against unpaid fees. 29. In the future, arrangements may be able to be made for an appropriate third party to hold funds on escrow (or as stakeholder) for both barrister and client, so that the barrister can get the commercial benefit of moneys being held on account without being constrained by the client money prohibition. However this is very much work in progress and raises a plethora of regulatory concerns which would have to be addressed first. [1] The same sort of arrangement could be (and perhaps is) also made in relation to disbursements which a barrister may have to incur on behalf of clients. [2] The hourly charging rate must also be agreed as part of this limb of the arrangement. First issued: January 2012 Standards Committee Bottom of Form
38_-_guidance_on_prohibition_on_handling_of_client_money.docx