Correspondent accounts

Chapter 14
 General
Attorneys are constantly giving instructions to one another by means of correspondence
Example: Client in Potchefstroom instructs an attorney’s practise to issue a divorce summons against her
estranged husband living in Cape Town. The practitioner in Potchefstroom cannot issue the
summons. The practitioner in CT is acting on behalf of the practitioner in Potchefstroom. The
client remains the client of the Potchefstroom practitioner and the practitioner in Potchefstroom
becomes the client of the practitioner in CT
The instructing attorney is the client of the instructed attorney
There is no link between the instructed attorney and the client of the instructing attorney.
Correspondent can be defined as one that has regular business dealing with another at a distance:
◦ Rendering services
◦ To another
◦ In a jurisdiction
◦ The other does not have direct access to
Business account is opened in the books of both the instructing attorney and the instructed attorney as well as
trust creditors account in case of trust monies received
 Instructing vs instructed attorney
Instructing attorney – attorney’s practise issuing the instructions
Instructed attorney – attorney’s practise receiving the instructions

Jurisdiction relating to the principle of appointing a correspondent

Practicing attorney receives a mandate from a client to collect money from a debtor in CT, the
practitioner from Pretoria won’t be able to summons in CT and will have to appoint another attorney
(correspondent) in CT to collect the money from the debtor on behalf of the client of the practitioner in
Pretoria
 The one-third allowance
Correspondent allowance may be granted by the instructed attorney to the instructing attorney –
maximum of one third of the fees
Allowance is not calculated on expenses paid directly to third parties

Calculation:
Amount collected R660
Fees levied R30
Collection commission received R66
=1/3 (66 + 30)
=R32
 Collection commission

On instructions to collect debt

Practitioner is entitled to collect 10% of the capital amount (VAT excluded) for each payment
Limits can apply to collection commission
 Drafting of the correspondent account
statement
Not applicable for this module
 Books of the instructed attorney

◦ No collections
Instructed attorney deals with a case from an instructing attorney where no trust monies are involved
The instructing attorney is responsible to the instructed attorney for the full amount of the account

◦ Trust monies received

Instructing attorney acts on behalf of a client and collections made by the instructed attorney are
eventually paid over to the client of the instructing attorney
Collections are made on behalf of a third party therefor trust funds are involved and imply that trust
creditors accounts should be opened in the books of the instructed attorney
 Books of the instructing attorney

An instructing attorney acts on behalf of a client and receives an account statement from an instructed attorney
who has executed the instruction and records the transactions from the account statement on completion of an
instruction
Accounts for both the client and the instructed attorney will be opened in the accounting records of the
instructing attorney
If no trust monies are involved = 2 accounts opened by instructing attorney
◦ Correspondent account
◦ Client account
If trust monies is involved = 3 accounts opened by instructing attorney
◦ Correspondent account – client account in business
◦ Correspondent account – client account in trust
◦ Instructing attorney’s client account
 Books of the instructing attorney

More than one instruction on the account statement

Instructed attorney can handle more than one instruction of the instructing attorney and settles these on
the same statement = one cheque issued in respect of various client
Instructing attorney must ensure that the transaction is set off against the correct client
The most important thing in this
LU is the steps in the workbook!!