The Bar Council has strongly opposed the Ministry of Justice (MoJ) proposals to introduce an Interest on Lawyers’ Client Account Scheme (ILCA). Under such a scheme a proportion of the interest earned on lawyers’ client accounts in England and Wales would be remitted to Government. 

In its response to the consultation, the Bar Council has set out it’s fundamental opposition to the scheme and detailed specific concerns with the proposals if they were to be pursued.

In particular, the Bar Council has stated:

  • Legal aid firms must not be in scope – these firms make no profit and significant numbers of legal aid firms have already closed over recent years
  • Low margin cases may also be adversely impacted – such cases have increased due to the impact of the Legal Aid Sentencing and Punishment of Offenders Act (LASPO) and include private family law, general housing disputes, employment and small business cases
  • It would be wrong to include interest accruing on sums paid as clients’ damages – compensation for future loss is calculated using the Personal Injury Discount Rate which assumes the claimant will enjoy an investment return on damages – forfeiture of the interest would undermine the basis on which damages are calculated
  • It would also be wrong to include interest where lawyers are managing funds for those who lack the capacity to manage their own property and affairs
  • The consultation is vague about how funds raised through the proposed scheme would be used – any funds collected must be ringfenced for legal aid and access to justice work and must not create a situation where the Treasury reduces its overall funding for the MoJ

Commenting, Chair of the Bar Council Kirsty Brimelow KC, said:

“There is no consultation on whether to introduce this scheme, only on how to do so – this misses the important question of whether it is right for the government to collect the interest on individuals’ and companies’ money.

“The consultation also makes no suggestion as to what the funds would be used for – that is a fundamental flaw in these proposals.

“The proposed scheme is overly broad. It should take legal aid firms, low margin firms and any funds paid as damages out of scope, or risk further damaging access to justice. Unmet legal need is already a significant problem and could be made worse by these proposals, particularly as there is not apparent consideration of the need to reinvest money from the court system back into the court system.”