Paying out more than is held for an estate client and replacing the shortfall (rules 5.3 and 6.1)

Rule 5.3 of the SRA Accounts Rules permits a withdrawal of client money only if sufficient funds are held on behalf of that specific client to make the payment. Only £2,000 was held for the estate, so paying £3,500 used £1,500 belonging to other clients, which breaches rule 5.3. Rule 6.1 requires breaches to be corrected promptly on discovery, and 'any money improperly withheld or withdrawn from a client account must be immediately paid into the account or replaced as appropriate'. The firm must therefore transfer £1,500 of its own money from business account to client account at once, so that other clients' money is restored. Expected receipts do not excuse the breach. The firm should also consider whether the breach must be reported to the SRA under its regulatory reporting duties.

Why A is wrong: Rule 6.1 requires immediate replacement; waiting for expected estate funds leaves other clients' money used for this client.

Why B is wrong: The firm must replace the shortfall immediately from its own money and record the transactions contemporaneously (rule 8.1); it cannot wait for the client.

Why C is wrong: The accountant's report does not correct a breach; rule 6.1 requires prompt correction on discovery.

Why E is wrong: Only the £1,500 shortfall needs replacing; the £2,000 held for the estate was properly used, and the liability was a genuine estate debt.