Published: November 01, 2010
Carpa Paris, the fund for lawyers’ financial settlements in the Paris courts, was set up by the president of the Bar, Claude Lussan, in 1957, in the form of a non-profit organisation under the law of 1901. Before this date, in fact, lawyers did not handle funds. Let me explain: lawyers drafted an act – transfer of business funds, transfer of businesses, etc., or they won a case for their client; but they didn’t have the right to see a contract or a procedure through to the end, because they could not receive the funds, representing for example the proceeds from the sale of a business, or damages, and distribute them among the beneficiaries.
Thus, the co-contracting parties or those involved in the trial sorted it out among themselves, at their own risk. Lussan’s idea was therefore to guarantee the handling of funds that were due to lawyers’ clients, as well as their correct distribution, whilst keeping control over the origin and destination of the aforementioned funds. Carpa Paris was thus created to receive these funds, check their origin and then distribute them to the beneficiaries. There was never any question of lawyers receiving this money directly into their bank accounts, which could cause confusion between their turnover and clients’ money.
As far as the lawyer is concerned, he is safe in the knowledge that Carpa Paris will have an objective control over the origin and destination of the funding that he places in his client’s account, particularly in the context of fighting against money laundering. More precisely, the lawyer deposits the funds into an account opened in his name in Carpa Paris’ books. Each transaction is isolated from the others in a sub-account of its own, so that there is no confusion between each of the lawyer’s clients.
I believe that Carpa Paris is much more responsive than certain banking or financial establishments.
Then Carpa Paris, after various checks, releases the funds as and when instructed by the lawyer, by issuing cheques that have the value of bank cheques, or by carrying out transfers for the financial beneficiaries. The client himself should in principle have many reasons to be happy with Carpa Paris’s services. Primarily, I believe that Carpa Paris is much more responsive than certain banking or financial establishments. Indeed, let’s imagine a transaction, the transfer of a business for example, with a closure that could take until late at night. In this hypothetical situation, we can, if necessary, keep a team working all day and night, as well as weekends, even on 15 August (a religious holiday) or 1 January; and release the funds as soon as the contract has been signed – of course, the funds will have been deposited beforehand by the buyer.
The Funds Handling team comprises 25 people and has, therefore, the necessary capacity, not only for dealing with a great number of credit and debit operations, but equally to deal with this type of exceptional circumstance. One must remember that French banks have the legal right to reverse a debit entry within two months. Imagine, many weeks after the sale of his business, a seller discovering that the credit shown on his bank statement has disappeared. To avoid this sort of incident, we have put an agreement in place with our bank, BNP Paribas, so that once the funds are presented to Carpa Paris, the credit is guaranteed. After a relatively short period, the cheque sent from the sub account of the lawyer at Carpa thus offers the same security as a bank cheque, as we guarantee a definite payment to the beneficiary. Finally, note that Carpa Paris offers an interest rate of up to 1.05%, better than the Caisse des depots et consignations, provided that funds are retained for a period of at least five months and amount to a minimum of EUR 75,000. [[[PAGE]]]
Current cash flow at Carpa Paris is in the region of EUR 11bn, despite the financial crisis. What is typically happening is that increasing numbers of businesses, regardless of their size, are becoming aware that it is in their interest for transaction funds to pass through our institution. That’s why Carpa Paris has tripled the volume of its funds under management in six years.
The law has given Carpa a public service remit, and that is to manage the legal aid scheme. Legal aid offers help for the most needy: legal consultations, free lawyers for civil or criminal trials, etc. The Ministry of Justice pays for the lawyers who agree to defend the most disadvantaged, and this works on a scale of fees set up by the law. Carpa Paris, like every Carpa office, has the job of receiving this public funding and sharing it among the lawyers who support the legal aid scheme, whilst taking on the financial responsibility for this management. Due to the number of legal aid cases in Paris, the service in question, Access to the Law, employs around 15 people, whose salaries are taken care of by our company. This organisation also has direct control of the total cost of running specific services, without any help from the Ministry of Justice. Take for example the ‘solidarity bus’, which parks for a few days a week in various districts of Paris, and is accessible to defendants who are nervous about approaching the town hall or the Palais de Justice to get their free legal consultation. In addition, Carpa takes on public interest assignments.
Yes, in addition to its duty under the law to handle the investments under its management, Carpa has to look after not only the distribution of funds to its public service projects but also the proper management of those funds, as member lawyers don’t pay any contributions. This funding comes exclusively from financial products drawn from the investment of the managed assets. The investment policy is examined once a week by an ad hoc commission, then it is subject to the approval of the president of the Bar, in his role as president of Carpa. The overall aim is an annual yield of between 3.5% and 4%. This yield was exceeded in 2008, with a rate of 4.3%, calculated from the average funds under management, and will be on target for 2009. The maturity of the investments ranges from a few months to a maximum of five years, with one half in fixed rate funds, and the rest in investment growth bonds issued by insurance companies, funds with a minimum guaranteed rate, and cash. Generally, we favour funds whose liquidation value grows or should grow fairly regularly.
The law has given Carpa a public service remit, and that is to manage the legal aid scheme.
We are currently in the evaluation stage of an alternative to Etebac. The HTML-compatible Ebics solution was suggested to us by our bank and seems to meet our needs. With Sepa, because each transfer that we carry out is a new payment, we do not have to update our databases in the way that large invoice registers or companies with a large number of suppliers or subcontractors have to.
I have been in this position since 2004. In fact, the governing body elects a management committee for the duration of the term of the president of the Bar which is two years. The management committee in turn elects its treasurer from among its members. Having said this, my job as treasurer only takes up a third of my time. I devote the other two-thirds to the practice where I have been a partner since 1988 and where I basically have a legal and judicial role in company and criminal commercial law.
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