Solicitors’ Accounts Rules - interest on client money

Another area for firms to review ahead of the implementation of the new handbook in October 2011 is the payment of interest on client money where it is ‘fair and reasonable’ to do so. These replace the previous, prescriptive solicitors’ accounts rules 24 – 27. Firms should take the opportunity to review their policy and, where appropriate, update their client care (or engagement) letters. Issues to consider include:

• When will it be fair and reasonable to pay interest? Firms should consider appropriate thresholds and ensure these are clearly communicated.

• How will the firm ensure that for larger sums of interest the client has been properly informed and treated fairly?

• When may it be appropriate to ‘contract out’ of the payment of interest with the client’s agreement? Firms should consider the sum of interest in question and whether the client may wish to contract out for specific reasons.