The proposal through the MOJ consultation could change how interest earned on lawyers’ client accounts is used. Client funds in relation to all “reserved legal activities” under the Legal Services Act 2007 would be in scope of the scheme. In the foreword to the consultation, the Rt Hon David Lammy MP notes that many firms currently retain interest generated on client accounts as income, and that, as law firms benefit from a strong justice system, they should contribute to its sustainability.
ICAEW’s Clients’ Money Regulations state that a fair rate of interest should be paid or credited to the client, or as instructed, unless the firm and the client agree to different arrangements in writing. Given the potential implications for clients and ICAEW-accredited legal services firms, ICAEW encourages firms to consider the proposals and share their views.
Responses are due by 9 February 2026.