Interest Policy

Policy version: 6th December 2024

1. Amount of interest

1.1. We will pay a fair sum of interest to clients or third parties on any client money we hold on their behalf.

2. Circumstances in which interest will not be paid

We will not pay interest:

2.1. On money we are instructed to hold outside a client account in a way that does not attract interest, e.g. cash held in our safe.

2.2. Where the amount of interest, calculated in accordance with this policy, is less than £50 on the basis that the costs associated with paying that interest are disproportionate to the amount involved.

2.3. Where we come to a different arrangement, in writing, with the client or third party for whom the money is held. Where we do so, we will provide sufficient information to enable the client or third party to give informed consent (see ‘Contracting out’ at section 9 below).

2.4. Where it is likely that the amount of interest payable is less than the administrative cost of processing it; taking into account, amongst other factors, the administrative cost of processing calculations and payments. 

3. Different types of client account

3.1. Client money can be held in a designated client account or in our general client account:

3.1.1. A designated client account is an account for money relating to a specific client, trust or third party, i.e. a specific bank account for a specific matter.

3.1.2. Our general client account is an account in which amounts for different matters and clients are pooled.

3.2. As a general rule, where we reasonably expect to hold money on behalf of a client or third party for at least the period stated below, we will pay it into a designated client account.

Amount of money held for client / third party : Period money expected to be held

£50,000: 16 weeks

£100,000: 8 weeks

£300,000: 4 weeks

£600,000: 2 weeks

£1,000,000: 1 week

3.3. This is not a rigid rule and we may agree an alternative approach at the request of the client or third party for whom the money is held.

3.4. We will also use a designated client account:

3.4.1. For money we hold as or on behalf of trustees under a trust.

3.4.2. On transactions in which the parties agree that some or all of the funds should be held in a separate account.

3.5. Any client money not held in a designated client account will be held in our general client account, unless:

3.5.1. Doing so would conflict with our obligations as a trustee of a trust, done of a power of attorney, Court of Protection deputy, trustee of an occupational pension scheme, etc.

3.5.2. The client money represents payments received from the Legal Aid Agency for our costs.

3.5.3. We agree an alternative arrangement in writing with the client or third party for whom the money is held.

4. Amount of interest

4.1. Unless we are instructed to the contrary, the firm will pay 75% of the interest received on money deposited into a designated client account to the client or third party to whom we ultimately pay the money on deposit. We will normally pay interest once the matter has concluded.

4.2. We will pay an amount in lieu of interest on money held in our general client account on the following basis:

4.2.1. The amount of interest will be based on the interest rate(s) payable by the bank on the relevant amount as if it had been held separately in our instant access general client account.

4.2.2. Interest will be calculated quarterly on the balance held for each individual matter, and compounded on a six-monthly basis,

4.2.3. We will normally calculate and pay interest once the matter has concluded.

4.3. Where we hold money for more than one client or third party, we will divide the interest in the same proportions.

4.4. Interest period

4.4.1. Interest will be calculated over the whole period we hold the monies, starting from the date the monies are treated by us as cleared funds.

4.4.2. Unless we are notified by our bank to the contrary, we will treat monies as cleared funds in accordance with below:

Method of payment: When are monies treated as cleared funds

Cheque: Five working days after the money has been paid into our client account

Debit or credit card: Date of actual receipt into the account

Bank transfer: The following working day

4.4.3. We will apply the same time periods when calculating the date that monies are received by the client or third party for whom the money is held.

4.5. Best available rate

4.5.1. We are required by the Solicitors Regulation Authority (SRA) to ensure client money is available on demand, unless we agree an alternative arrangement in writing with the client or third party for whom the money is held. We therefore hold client money in instant access accounts, unless we have agreed an alternative arrangement.

4.5.2. This means the interest rate paid on client money held in a designated client account or our general client account may not be as high as could be achieved if the client or third party placed the money on deposit themselves. 

5. Tax liability

Interest on money held in our general client account or in a designated client account will be paid before deduction of tax. It will be the recipient’s responsibility to declare interest received to HMRC.

6. Monies held on more than one matter

Where we hold money on more than one matter for a client or third party, interest will be calculated separately for each individual instruction, unless it is fair to aggregate the interest.

7. Special cases

7.1. If we hold money jointly with a client, the interest earned will belong to the firm, unless we agree otherwise.

7.2. If we hold money jointly with another firm, we will agree with the other firm how interest will be allocated.

8. Unpresented cheques

Where we pay money by cheque to a client or third party who delays in paying the cheque into their bank, we will pay additional interest only where it is fair in all the circumstances to do so. We reserve the right to charge for the additional work involved.

9. Contracting out

9.1. We may, by written agreement with the client or third party for whom the money is held, contract out of the terms of this interest policy.

9.2. When agreeing to contract out, we will:

9.2.1. Act fairly and in the best interests of any relevant client; and

9.2.2. Provide sufficient information to enable the client or third party for whom the money is held to give informed consent.

10. Monitoring and review

10.1. The firm’s compliance officer for finance and administration (COFA) is responsible for this policy.

10.2. The COFA will monitor compliance with this policy and will review this policy regularly, at least annually.