SOLICITOR' ACCOUNTS.
IT is possible that an unthinking public may have passed over, or at most read with indifference, the notice of a meeting of the Law Society specially called to consider the appointment of a Committee on the right method of keeping solicitors' accounts. Those of us who are at all familiar with these documents may be disposed to think that, behinging as they do to the class of necessary evils, nothing can be gained by discussing them; and if solicitors' accounts meant only solicitors' bills, this easy way of dis- missing them from our thoughts would have great claims on our adoption. The taxation of costs is no doubt a very proper employment for public officials, but it may be questioned whether a client • ever gained anything by essaying to tax his solicitor's costs for himself. But " accounts " is a term which has more than one meaning. When it stands only for the statement of charges sub- mitted to a client, there may be little use in dwelling on it. The most valuable lesson to be derived from the study of it is that law is a very costly business, 'and he must be an unusually litigious person who needs to have this brought home to him. It is different when by "accounts." is understood' the method in which a solicitor records the ownership of the funds belonging to his clients which from time to time come into his hands, and remain there for longer or shorter periods. The custody of securities and the handling of money left with him for investment are matters which have so often been forced upon public attention that it is impossible even for outsiders not to feel some interest in' them, and it is with solicitors' accounts in this sense that the Law Society was busy last week. The subject appears, however, to have been forced upon a somewhat reluctant body, for the motion to appoint a Committee was lost, and a poll of the Society has in consequence to be taken on it early in the New Year.
A correspondent of the Times has stated very clearly what the issue is which has then to be determined. It is, he says, a too frequent custom, even amongst solicitors of important standing, to regard their floating balance as proper material for speculation. If this floating balance were their own, this custom would not concern the general public. A solicitor is not bound to tell his clients to what uses he puts his money. The only 'point of view from which it can possibly concern them is the light it might throw upon the general soundness of his judgment. But in many' cases this floating balance is not his own. It is largely the property of his clients. Some of them are in the habit of allowing their money to remain with their solicitOrs while it is awaiting investment. The solicitor, perhaps, is look- ing about for a mortgage, or inquiring into a title, and it is convenient to leave in his hands the sums which will in the end be wanted for these transactions. If the solicitor's accounts show exactly to whom the sums in question belong, no harm is done. But if they are merged in his own balance, and are subject to his own liabilities, that too familiar series of borrowings and repay- ments, of anticipations and replacements, which has so often ended in disaster may be going on all the time. There is no public audit of solicitors' accounts, and no means of ascertaining how their floating balances are distributed among various owners. For business purposes the money is all reckoned as their own, and is, or may be, handled by them as though it were their own. The mere fact of having a much larger sum standing in his name than properly belongs to him is in the nature of a temptation. Of course there are numbers of solicitors to whom it does not appeal in the very least, and many more by whom it is resisted ; and if there were no instances of its being yielded to, the public might not much care whether the system continued or came to an end. Unfortu- nately, they. cannot give themselves any such consoling assurance. Defaulting solicitors, though they constitute so minute a proportion of the whole body, are not unknown, and as the cases which occasionally come to light belong to no particular class of the profession, but are impartially distributed over all classes, no solicitor can, in the abstract, be pronounced safe beforehand. The exceptional and abnormal solicitor of our thought may not—probably he does not—begin by using other people's money for his own purposes. In the first instance, perhaps, he keeps in his mind the fact that only so much of his nominal balance is his own property, and that the rest belongs to such-and-such clients. But the habit of dealing with a balance which appears much larger than it really is, though it may be harmless for a time, may some day suggest a way out of an unforeseen difficulty or a use for an unexpected opportunity. A speculation which he thought safe turns out to be the reverse of safe, and he is suddenly called upon to pay in cash the difference between expecta- tion and fulfilment. Or an exceptional chance of making an investment offers itself which is not likely to recur, and is certain—at least as good as certain—to yield a very large profit. In the former case, the use of that part of the balance which is only his -in name may save him from ruin ; in the latter, it may lay the foundation of a fortune far larger than he could hope to make in the ordinary routine of business. While human nature remains what it is, men will go on ruining themselves in one or both of these ways, and it should be, the first business of the pro- fession at large to interpose all possible obstacles to their doing so. It is to be regretted that the meeting of the Law Society was not fully • reported, since if it had been we should have known what the reasons were which led a majority of those present to vote against the appointment of the Committee asked for. The cases of fraud have been quite numerous enough to cause a good deal of uneasiness, and the more so' that they suggest no means by which the public can protect themselves. It is no good to resolve to go, only to first-class firms,—first-class firms have yielded their full proportion of fraudulent members. Indeed, a small and unknown firm seldom commands confidence enough to make fraud possible. So long as solicitors' accounts are kept as they appear to be kept now, personal knowledge is the only guarantee that a client can hope to have, and personal knowledge has again and again proved worthless for this purpose.
A writer in the Times who signs himself " An Old Solicitor " wishes to apply a more drastic remedy. He would, if we understand him rightly, forbid solicitors to act as bankers to their clients or to receive money with discretion as to the investment of it. No doubt if this were done the end we have in view would be attained still more completely than by any restriction involved in the adoption of improved methods of keeping accounts. Our fear is that the inconvenience caused by this plan would give an advantage to those of the profession who are opposed to any change. To forbid a solicitor to retain any money at his bankers except that which belongs to himself would be a far more stringent measure than to compel him to keep his accounts in a way which should show exactly what did belong to him. That it would give greater security against fraud is possible, and perhaps probable ; but when the lesser cure excites so much opposition, what reason is there to suppose that the greater would have more chance of commending itself to those with whom in the first instance it rests to devise a remedy ? It is not a question, as "An Old Solicitor" seems to think, of being " in sympathy " with those who retain their clients' money in their own hands, but of choosing whether to abolish a system which many people find useful, or to subject it to stricter rules. If the Law Society thinks the former the more excellent way, we shall find no fault with its choice. But we are all familiar with a desire for reform which leads those whom it animates to resist all half-measures without taking into account the fact that they might be carried into effect, whereas the more complete remedy is possibly quite out of reach. The same objection might not apply to a third plan which is worth considering along with those already mentioned. Let us assume that out of regard for general convenience it is not thought expedient to forbid solicitors retaining their clients' money for investment, and that, for reasons too recondite for outsiders to appreciate, it is thought degrading to the profession to compel solicitors to show how much of their balance belongs to their clients, and how little of it to themselves. Why should not the Law Society undertake to guarantee its clients against losses incurred by the fraudulent acts of any of its members ? The cost to each member of the Society would probably be very small, for though the cases of fraudulent solicitors may not be few absolutely, they are very few indeed relatively, while the losses against which clients would be protected usually spell ruin. No doubt under such a scheme a certain amount of supervision and control on the part of the central body would be required, including a strict audit, but the provision of such restraints need not, we think, prove too difficult to be accomplished. A body like the Law Society may very well claim to be left to make its own choice between these alternative schemes, but it ought not, by rejecting them all, to announce that it sets either its dignity or its pocket before the interests of its clients. Indeed, the last course we have mentioned would probably be advantageous to the Society, so far at least as it values additions to its numbers. If membership carried a guarantee against loss to clients arising out of fraudulent handling of their money, it would not be long before the first question put to a solicitor by a new client would be, "Do you belong to the Law Society ? " This, however, as we have said, is a matter for the Society to settle. There it are more ways than one in which t may put itself right with the public. It will be unfortunate if it chooses to reject them all.
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