ISSUES FOR DETERMINATION
(a) Whether an Advocate qualified under section 9 of the Advocates Act and practicing in his own name is required to register under the Registration of Business Names Act, Cap 499;
1. Pursuant to the Amendment to section 32 of the Advocates Act, CAP 16 an Advocate may engage in practice on his own behalf upon being issued with a Practising Certificate.
2. The reading of Section 4 (b) of the Registration of Business Names Act, implies that an individual having a place of business in Kenya and carrying on business under a business name which consist of his surname or any addition other than his forenames or the initials thereof, is exempted from the mandatory requirement for registration under the Act.
3. Further, the mandatory requirement to deliver a copy of the Registration Certificate under regulation 5 of the Law Society of Kenya (General) Regulations, 2020, applies to Advocates practising under a law firm duly registered under the Registration of Business Names Act.
(b) Whether the Advocate practising in their individual capacity may open, operate and/or manage a Bank Account for purposes of conducting their practice;
4. Although Advocates practising in their individual capacity are not barred from maintaining bank accounts for purposes of conducting their practice, there are ethical and professional issues that arise in respect of handling client funds.
5. The Law Society of Kenya Standards of Professional Practice and Ethical Conduct (SOPPEC-5), provides that an Advocate is a trustee of client’s funds and other property in his possession or under his control. The Advocate therefore has responsibilities of a fiduciary nature towards his/her client which entails:
- Keeping client’s funds separate from the Advocate’s own monies and avoiding co-mingling of funds;
- Faithfully accounting to the client for any use made of the funds on the client’s instructions for disbursements and other purposes;
- Promptly paying out to the client any money belonging to the client; and
- Safeguarding other client’s property in his/her possession to prevent loss, damage or unauthorized access and or use.
6. Therefore, to observe this fiduciary duty, the Advocate is obligated to disclose and specify whether the Account is an Office Account or a Client Account, to prevent misappropriation and/or conversion of client’s funds which constitutes professional misconduct.
7. Further, under the Advocates (Accountant’s Certificate) Rules,1967, an Advocate is required to deliver to the Council a certificate signed by an Accountant. Rule 5 mandates the Accountant to ascertain whether the Advocate has maintained a Client Account.
(c) Whether the Bank is barred by statutory provisions from opening such a bank account.
8. Having looked at the Banking Act, Cap 488 and the Central Bank of Kenya Prudential Guidelines, 2013, there is no express provision prohibiting or restricting the type of clients that a Bank should maintain. Therefore, a bank will not be in any violation by opening and maintaining a bank account for an Advocate practicing in their individual capacity.
9. Further, the bank is protected under section 82 of the Advocates Act which stipulates that the bank shall not incur any liability or be required to make any inquiry or be deemed to have any knowledge of rights of any person to money paid or credited to such account, unless the account is kept by an advocate as trustee for a specified beneficiary.
An advocate practicing in their individual capacity may open and maintain a bank account for purposes of conducting their practice provided that there is full disclosure as to the type and purpose of the Account.