1. The Guidance
With interest rates increasing, law firms are finding themselves in a position, for the first time in a long time, that sums of interest are exceeding the de minimis level in their terms and conditions. This clause in the terms and conditions is there to avoid the firm spending disproportionate time calculating and processing interest payments to clients for small sums of money.
To recap the SRA Accounts Rules,:-
- Rule 7.1 states “You account to clients or third parties for a fair sum of interest on any client money held by you on their behalf”.
- Rules 7.2 goes on to say that “You may by a written agreement come to a different arrangement with the client or the third party for whom the money is held as to the payment of interest, but you must provide sufficient information to enable them to give informed consent.”
Therefore, firms must ensure that: –
- They are confirming in their terms and condition the level at which interest will or will not be paid.
- They have a written agreement with the client, which they can obtain through signing terms and conditions. Whilst firms will send client care letters and terms and conditions, the signing of acceptance, in our experience, can often be overlooked. Failure to obtain signed approval will render the firm in breach of Rule 7.2 if it retains interest.
Remember, you can apply your agreement to all client monies held in your general client account or in deposit accounts.
It is also sound advice to pay interest at the conclusion of a matter rather than in intervals as a firm will risk exceeding the de minimis figure if the interest figures are not tracked on an ongoing basis.
Historically firms have used the sum of £20 as a de minimis figure, and this largely came from a previous old version of the rules drafted some time ago. The general view now, though, and over time, is that a de minimis level of £50 is not unreasonable, and firms may want to review their terms and conditions.
In addition, firms should review their process for sending and obtaining signed terms and conditions.
2. Help with your Client Care Documents
If it has been a while since you have reviewed your client care documents, including terms and conditions, The strategic Partner has a fixed-price solution for drafting client care packs. Our client care solution provides one letter across all departments and avoids firms having multiple letters for different departments and matter types, which can prove difficult to track and maintain.
3. Help with Compliance and Risk Management
The Strategic Partner has developed effective solutions firms to support COLPs, COFA and MLROs with risk and compliance. We aim to bring expertise to ensure the firms we work with maintain a compliant environment through delivering Policies, Controls and Procedures, Auditing, Training, Advice, Guidance and Register Management.
Our solutions start from as little as £250 a month. Links to our brochures are as follows:-
These are comprehensive packages set at affordable prices for all firms.