The dreaded 'p' word - How to pay your lawyer securely
Carol Harris, Head of Financial and Member Services at the Bar Council, explains how clients can pay their lawyers securely and when the job is done thanks to something called BARCO.
First launched to the Bar in April 2013, BARCO is the result of two years of exhaustive research and planning. It was established to provide a unique solution to enable barristers to handle client money which, under the Bar Standards Board's rules (the regulatory body for barristers), they are not allowed to do, unlike solicitors who have client accounts.
It was developed in partnership with barristers, their clients, the regulatory community, and in consultation with City insurers and the banking community to ensure that it was transparent, sensible and cost effective.
What is BARCO?
Bar Services Company Limited, trading as BARCO, is a third party company, owned and operated by the Bar Council. It operates an escrow account service to manage the funds to facilitate ongoing legal services provided by lawyers in England and Wales. An escrow is an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party, in this case BARCO, receives and disburses money for the transacting parties. The timing of such disbursements is dependent on the fulfilment of contractually-agreed conditions by the transacting parties.
For the barrister handling client money is a very costly and risky business. BARCO provides a safe and regulated alternative which can reduce infrastructure costs; lower the cost of indemnity insurance; help keep the cost of risk-focused regulation as low as possible and protect the reputation of the profession if things go wrong.
If barristers can't handle client money, what options are there? With public access instructions they can either price the work out exactly beforehand for each piece of work, stopping and starting work on a case until the appropriate remuneration has been received, or bill in arrears which is really not a sound credit decision.
For the client, using BARCO to hold the money whilst their barrister undertakes their legal work gives peace of mind and consumer protection. BARCO operates on a three way contract between the lawyer, the client and BARCO. Funds will only be released to the barrister when permission is received from the client. If there is a dispute concerning payment, then BARCO will freeze the funds in the account until the dispute has been resolved.
BARCO is regulated by the Financial Conduct Authority and also registered with HM Revenue and Customs under Anti-Money Laundering regulations. It is also fully insured against all risks. Although not regulated by the Bar Standards Board, BARCO is fully compliant with the BSB's guidelines for escrow services.
BARCO operates on software from Barclays Bank and is therefore a virtual branch of Barclays. This enables the service to be fast, efficient and secure. Everything is done electronically so as soon as BARCO receives the account opening form, client care letter and certified copies of the client's ID, the account is opened and both parties notified. The funds remain in the segregated account until the conclusion of the case at which time all of the accrued interest is returned to the client together with any residual balance. BARCO does not retain any of the interest.
What does it cost the client?
The simple answer to that is nothing at all. There is an administration charge but this is to the barrister and levied on his or her fees at the time of withdrawal.
The service has grown rapidly both in reputation and the number of new cases, which have increased steadily month by month. The Bar is now recognising the value of the service and how it enables the Bar to win work and secure their fees in advance, thereby eliminating the risk of unpaid fees. They also appreciate the peace of mind that they are not going to fall foul of the BSB guidance. Another factor in the growth of the service is the ever-increasing number of barristers who undertake public access work.
There have been several highlights in BARCO's journey so far, one being a public access Class Action against a major financial institution with over 200 people each contributing to a "fighting fund” for court costs. BARCO was delighted to be able to help with this and although the case was initially lost, it was won on appeal with BARCO again handling the top up funds. Several sets of Chambers are now using BARCO for all of their public access work and many others are using the service for international work with BARCO setting up dedicated US Dollar, Swiss Franc and Euro accounts for this work.
The Solicitors Regulation Authority (SRA), which regulates solicitors, has recently given the green light for solicitors to use BARCO, something which until now they could only do upon being granted a waiver. These new rules will come into force next year and we look forward to extending our service to the whole of the legal profession.
For further information on BARCO please contact the team at email@example.com
Carol Harris, Head of Financial and Member Services