Regulating Solicitor’s Clients’ Money: A Stitch in Time Saves Nine

In West Malaysia, solicitors are regulated under the Legal Profession Act 1976 (LPA). Pertaining to holding clients' money to perform the clients' instructions, the LPA empowers the Bar Council to enact rules under Section 78. Pursuant to the said power, Solicitors Account Rules 1990 (SAR) is enacted to regulate the the management and maintenance of clients' money hold by solicitors. However, SAR only provides a minimum rule on maintaining clients' money with no fund security and primarily based on trust and confidence in the solicitor's profession. Due to this fact, mismanagement and misappropriation of client's monies are expected, which some resulted in the solicitors charged for criminal breach of trust of clients' money under the Penal Code (Act 574). Nevertheless, no criminal action against a legal firm that misappropriated the client's money as a legal firm is not a legal entity under criminal law. This paper examines the legal firm's compliance in managing the client's money under the SAR. The paper employs a doctrinal method and applies a content analysis approach. The research concludes that there is in dire need of the monitoring compliance mechanism for the protection of clients’ money as adopted by other jurisdictions. This paper proposes an amendment to SAR, which incorporates the due diligence process to maintain the client's money and penalty provisions to ensure that solicitors compensate for any misappropriation of clients’ money.