Solicitors Accounts Rules 24-27

ALL the interest earned on the account (Rule 24(1) and note (i))

A sum in lieu of interest (Rule 24(2))

Calculated in accordance with Rule 25

It can be retained by the solicitor (Rule 24 - note 1, referring to Solicitors Act 1974 s33(3))

• 1. If the amount calculated is £20 or less (Rule 24(3)(a)) - f sums of money are held in relation to separate matters for the same client, other person or trust, it is normally appropriate to treat the money relating to the different matters separately, so that, if any of the sums calculated is £20 or less, no sum in lieu of interest is payable. There will, however, be cases when the matters are so closely related that they ought to be considered together – for example, when a solicitor is acting for a client in connection with numerous debt collection matters - Rule 24 note v
• 2. If the solicitor holds a sum of money below for a time not exceeding the length below (Rule 24(3)(b)(i)):
• £1000 - 8 weeks
• £2000 - 4 weeks
• £10 000 - 2 weeks
• £20 000 - 1 week
• 3. If the solicitor holds an amount over £20000 for less than one week unless it is fair and reasonable given all circumstances to pay interest (Rule 24(3)(b)(ii))
• 4. On money held on counsel's fees once counsel has requested a delay in settlement (Rule 24(3)(c))
• 5. On money held for the legal services commission (Rule 24(3)(d))
• 6. On an advance from the solicitor under rule 15(2)(b) to fund a payment on behalf of the client or trust in excess of funds held for that client or trust (Rule 24(3)(e))
• 7. if there is an agreement to contract out of the provisions of this rule under rule 27 (Rule 24(3)(f))

Yes if it is fair and reasonable in the circumstances to aggregate the sums in respect of the individual periods (Rule 24(4)).

Yes, if it is fair and reasonable in all the circumstances (Rule 24(5))

Yes, all the interest, to the client/relevant person (Rule 24(6)(a))

Yes, all the interest, to the trust (Rule 24(6)(aa))

No -as there will be no interest. A sum in lieu of any net loss of interest suffered by the client (or that person) as a result is payable instead (Rule 24(6)(b))

No. Rule 24 - note ii

No

• Because the money is not held by the solicitor. All interest earned belongs to the client. The same applies to any
• account in the client's own name operated by the solicitor as signatory
• under rule 11.

Rule 24 - note iii

Yes. Because it is client money

Rule 24 - note iv

• - when handling client money and transaction is out of the ordinary.
• - A reasonable administrative fee can be charged.

Rule 24 note vi

• - Whether interest should be recalculated depends on all the circumstances
• - A reasonable charge may be made for any extra work carried out if the solicitor is legally entitled to make such a charge

Rule 24 note vii

Solicitors who are Liquidators, trustees in bankruptcy, Court of Protection deputies and trustees of occupational pension schemes.

Rule 24 note viii refers to Rule 9

Part C also does not apply to joint accounts (Rule 24 note ix). If a solicitor holds money jointly with a client, interest earned on the account will be for the benefit of the client unless otherwise agreed. If money is held jointly with another solicitors' practice, the allocation of interest earned will depend on the agreement reached.

Complain to the legal complaints service (Rule 24 note xa)

Try to resolve the matter with the solicitor

A reasonable rate (Rule 25 (1))

A fair sum.

It need not necessarily reflect the highest rate of interest obtainable but it is not acceptable to look only at the lowest rate of interest obtainable.

Rule 25 (1))

• - on the balance or balances held over the whole period for which cleared funds are held
• - at a rate not less than (whichever is the higher of) the following
• (i) the rate of interest payable on a separate designated client account for the amount or amounts held, or
• (ii) the rate of interest payable on the relevant amount or amounts if placed on deposit on similar terms by a member of the business community
• - at the bank or building society where the money is held.

Rule 25(2)

If held successively or concurrently in accounts at different banks or building societies the relevant bank or building society for the purpose of paragraph (2) will be whichever of those banks or building societies offered the best rate on the date when the money was first held.

Rule 25(3)

Generally payable at the conclusion of the client's matter, but might in some cases consider it appropriate to account to the client at intervals throughout - Rule 25 note i

The "relevant bank or building society for the purpose of paragraph" will be a clearing bank or building society nominated by the client (or other person).

Rule 25(4))

The solicitor-trustee has a particular obligation to comply with the requirement in paragraph (1) to account for a fair sum in lieu of interest.

Rule 25 (5))

Usually no - usually they will cancel each other out (when money is recieved and paid by cheque).

It will be satisfactory to look at the period between the dates when the incoming cheque is banked and the outgoing cheque is drawn. Rule 25 note ii

Yes.

• The relevant periods would normally be:
• - From the date when a solicitor receives incoming money in cash until the date when the outgoing cheque is sent;
• - From the date when an incoming telegraphic transfer begins to earn interest until the date when the outgoing cheque is sent
• - From the date when an incoming cheque or banker's draft is or would normally be cleared until the date when the outgoing telegraphic transfer is made or banker's draft is obtained.

Rule 25 note iii

• - When the client expressly says otherwise
• - when the circumstances clearly indicate otherwise

- The need for immediate access (Rule 25 note v)

• - The same as calculated by rule 24
• - Payable to the person to whom the stake is paid

Rule 26

In appropriate circumstances (Rule 27(1))

• Whether it is appropriate to contract out depends on all the
• circumstances, for example, the size of the sum involved or the nature,
• status or bargaining position of the client. It might, for instance, be
• appropriate to contract out by standard terms of business if the client
• is a substantial commercial entity and the interest involved is modest
• in relation to the size of the transaction. The larger the sum of
• interest involved, the more there would be an onus on the solicitor to
• show that a client who had accepted a contracting out provision was
• properly informed and had been treated fairly. Contracting out is never
• appropriate if it is against the client's interests - Rule 27 note i

• Solicitors should act fairly towards their clients and provide sufficient information to enable them to give
• informed consent if it is felt appropriate to depart from the interest provisions - Rule 27 note i

- When there is WRITTEN agreement by BOTH his/her client and the other party (Rule 27(2))

In principle yes

A reasonable amount

Rule 27 - note ii

• It might also be appropriate to include a special provision in the contract that the solicitor–stakeholder retains the interest on the deposit to cover his or her charges for acting as stakeholder. This is only acceptable if it
• will provide a fair and reasonable payment for the work and risk involved in holding a stake. The contract could stipulate a maximum charge, with any interest earned above that figure being paid to the recipient of the stake. (Rule 27 note iii)

• If, for instance, a prior agreement with the client for a fixed fee for the client's matter, or for an estimated fee which cannot be varied upwards in the absence of special circumstances. It is therefore not normal practice
• for a stakeholder in conveyancing transactions to receive a separate payment for holding the stake.

Rule 27 note iv

- Taking unfair advantage either of the client or the other party if unrepresented (Rule 27 note v)