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Paul Mosson explains the background to BARCO, its modus operandi and its role within the growing area of public access
First launched to the Bar in April 2013, BARCO was established to provide a unique solution for handling client money that allowed the Bar Standards Board (BSB) to uphold its prohibition on barristers and BSB regulated entities holding client money themselves.
It was developed in partnership with the Bar, the Bar’s clients, the regulatory community, and in consultation with City insurers and the banking community to ensure that it was transparent, low-risk and cost effective.
What is BARCO?
BARCO is owned and operated by the Bar Council and operates an escrow account service to manage the funds required 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 predetermined contractually agreed conditions by the transacting parties.
Handling client money can often be a costly and risky business. BARCO is a safe and regulated alternative which will 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. Barristers have limited options if they are unable to handle client money and they don’t use BARCO. With public access instructions on the rise, many are faced with either strictly scoping the work out beforehand for each piece of work, stopping and starting work on a case until the appropriate remuneration has been received, or billing in arrears which is a high risk credit decision. This is where BARCO provides a real alternative.
BARCO is regulated by the Financial Conduct Authority and is registered with HM Revenue and Customs for 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.
How it works
It works on a three-way contract between the lawyer, the client and BARCO. Once funds are transferred into BARCO the beneficial interest passes to BARCO. There is no trust arrangement as the client retains a contractual right only to be repaid. BARCO interfaces directly with its bank which 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 operational. The funds remain in the segregated account until the conclusion of the case at which time all of the accrued interest is paid to the client together with any residual balance. BARCO does not retain any of the interest. A modest administration fee is charged when funds are paid out and should there be any dispute between the lawyer and the client, the funds are frozen until the dispute is resolved.
The number of new cases using BARCO has increased steadily month by month, and the reputation of the service has grown along with it. The Bar is now recognising its value and how it enables the Bar to win work and secure their fees in advance, thereby eliminating the risk of unpaid fees. Barristers and chambers also appreciate the peace of mind of knowing that they will not fall foul of the BSB guidance. Another factor in the growth of the service was the green light given in January 2014 to apply to conduct litigation, as well as the ever-increasing number of barristers who undertake public access work. BARCO is also working closely with the BSB to support entity regulation.
There have been several highlights in BARCO’s journey so far, one being a 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 is now assisting with the appeal. A second class action is also being handled. Neither of these instructions could have been accepted on a direct access basis had BARCO not been involved. Several sets of chambers are now using BARCO for all of their direct access work and many others are using the service for international work, with BARCO setting up dedicated US Dollar and Swiss Franc accounts to facilitate this.
BARCO is also discussing how the service could be expanded to work with solicitors, following discussions with the Solicitors Regulation Authority (SRA). We are currently awaiting the outcome of the SRA’s consultation into its accounts rules which contained a proposal for alternatives to client accounts, with third party accounts such as BARCO being the potential solution.
For further information on BARCO please contact the team at contact.us@barco.org.uk.
Contributor Paul Mosson, Director of Services, Bar Council
Paul is a Director of BARCO and also Director of Services (Representation, Policy and Services) for the Bar Council of England and Wales.
It was developed in partnership with the Bar, the Bar’s clients, the regulatory community, and in consultation with City insurers and the banking community to ensure that it was transparent, low-risk and cost effective.
What is BARCO?
BARCO is owned and operated by the Bar Council and operates an escrow account service to manage the funds required 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 predetermined contractually agreed conditions by the transacting parties.
Handling client money can often be a costly and risky business. BARCO is a safe and regulated alternative which will 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. Barristers have limited options if they are unable to handle client money and they don’t use BARCO. With public access instructions on the rise, many are faced with either strictly scoping the work out beforehand for each piece of work, stopping and starting work on a case until the appropriate remuneration has been received, or billing in arrears which is a high risk credit decision. This is where BARCO provides a real alternative.
BARCO is regulated by the Financial Conduct Authority and is registered with HM Revenue and Customs for 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.
How it works
It works on a three-way contract between the lawyer, the client and BARCO. Once funds are transferred into BARCO the beneficial interest passes to BARCO. There is no trust arrangement as the client retains a contractual right only to be repaid. BARCO interfaces directly with its bank which 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 operational. The funds remain in the segregated account until the conclusion of the case at which time all of the accrued interest is paid to the client together with any residual balance. BARCO does not retain any of the interest. A modest administration fee is charged when funds are paid out and should there be any dispute between the lawyer and the client, the funds are frozen until the dispute is resolved.
The number of new cases using BARCO has increased steadily month by month, and the reputation of the service has grown along with it. The Bar is now recognising its value and how it enables the Bar to win work and secure their fees in advance, thereby eliminating the risk of unpaid fees. Barristers and chambers also appreciate the peace of mind of knowing that they will not fall foul of the BSB guidance. Another factor in the growth of the service was the green light given in January 2014 to apply to conduct litigation, as well as the ever-increasing number of barristers who undertake public access work. BARCO is also working closely with the BSB to support entity regulation.
There have been several highlights in BARCO’s journey so far, one being a 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 is now assisting with the appeal. A second class action is also being handled. Neither of these instructions could have been accepted on a direct access basis had BARCO not been involved. Several sets of chambers are now using BARCO for all of their direct access work and many others are using the service for international work, with BARCO setting up dedicated US Dollar and Swiss Franc accounts to facilitate this.
BARCO is also discussing how the service could be expanded to work with solicitors, following discussions with the Solicitors Regulation Authority (SRA). We are currently awaiting the outcome of the SRA’s consultation into its accounts rules which contained a proposal for alternatives to client accounts, with third party accounts such as BARCO being the potential solution.
For further information on BARCO please contact the team at contact.us@barco.org.uk.
Contributor Paul Mosson, Director of Services, Bar Council
Paul Mosson explains the background to BARCO, its modus operandi and its role within the growing area of public access
First launched to the Bar in April 2013, BARCO was established to provide a unique solution for handling client money that allowed the Bar Standards Board (BSB) to uphold its prohibition on barristers and BSB regulated entities holding client money themselves.
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