Hi all, I have a question on whether a legal firm should pay interest on funds held in their general/pooled client account? The Solicitor told me that they don't make any interest on their client account therefore there is no interest to pay me for the funds they are holding.
I have never questioned his position on this, however, the other day I came across the following:
- Rule 7.1 of the SRA Accounts Rules requires firms to pay their clients a 'fair' sum of any interest earned on client money.
- The Firm’s Liability: If the firm’s pooled client bank account yields little to no interest, the firm is still obligated to calculate and pay a "fair" amount of interest based on what the client would have earned had their funds been placed in a designated instant-access deposit account.
We are talking about a large amount of money that has been held in the firm's client account for over 4 years (pending resolution of a dispute). Therefore, if a fair amount of interest should be paid, it would be a significant amount.
I checked the paperwork I have with the law firm and in their terms of business it says they pay interest on funds held by their firm.
Based on what I’ve found, I believe this warrants a letter to the solicitor to look into this further. If anyone is knowledgeable in this area or would like to comment, I'd really appreciate this. Thank you.