Bar Council introduces new rule to prevent misuse of clients’ funds

Pasar Bar Council has implemented a new rule mandating that partners in a legal firm must jointly sign cheques and oversee multi-factor authentication for online transactions involving clients' accounts. This regulation will commence next year, following apprehensions regarding substantial insurance payouts resulting from misconduct and dishonesty in managing client accounts.

The Bar Council issued a circular on September 25, stating that this new rule aims to prevent the trend of significant payouts from leading to higher overall losses and increasing premiums for all legal firms in the long run.

Under the new rule, legal firms with more than one partner are required to have two partners as signatories for all transactions, with an exception for cases where account operations need to be stopped or transactions are cancelled, where a single signatory would suffice. Additionally, firms utilizing electronic banking must implement multi-factor authentication for accessing clients' accounts, managed by the firm's partners.

Although many firms already employ similar security measures, the Bar Council aims to standardize these practices without imposing undue burdens.