On 9 March, the UK government closed its consultation on proposals to raise funds through an Interest on Lawyers’ Client Accounts Scheme (ILCA) in England and Wales.
The Law Society – alongside UK Finance, the Association of Personal Injury Lawyers, the City of London Law Society and the Legal Aid Practitioners Group – are strongly against the proposals, as they amount to nothing more than a crude sector-specific tax on clients of legal services.
In our consultation response, we argued that the government is proposing to use client money to fund our justice system, adding regulatory burdens for firms, with vulnerable clients ultimately paying the price. The Solicitors Regulation Authority, in its response, has outlined various regulatory issues that have not been properly worked through in the Ministry of Justice’s proposals, and has highlighted the potential cost implications.
Access to justice would be compromised for some groups of consumers and firms will have to find ways to manage additional costs created by the scheme. Some clients will ultimately have to pay higher legal fees, and law firms may no longer be able to offer some services, including legal aid, affecting clients who are most at risk.
Law Society research shows vast legal aid deserts across England and Wales without direct access to a legal aid advice provider. For example, 44% of people do not have access to a local housing provider, 70% of people do not have access to a local community care provider and 90% do not have access to a local education provider.
These deserts will only increase should the ILCA scheme proceed. The ILCA proposals do nothing to address basic legal need.
Client money belongs to clients
The SRA makes clear that client money belongs to clients. Interest is client money and whilst in some circumstances, firms can retain some interest and use it towards lowering the cost of delivering services, they must account for a fair sum to clients and be clear about their interest policy to clients.
The MoJ’s ILCA scheme means the government will be using client money as an unreliable source of revenue to address general budget shortfalls instead of budgeting properly for an effective justice system
The justice system is a core public service that benefits everyone, and it is fair that we all contribute to its funding through general taxation, just as we do for the healthcare system, rather than expecting patients to pay more.
Solicitors already make a substantial contribution to the justice system, and imposing proposals that single out solicitors’ firms and their clients sets an unfair precedent, especially as the legal sector contributed an estimated £38 billion to the UK economy in 2024, around 1.5% of total gross value added.
The MoJ’s ILCA scheme is not fit for purpose and should not be implemented.
Next steps
The government will now be evaluating stakeholders’ responses to the scheme.
The Law Society has continued to lobby government on behalf of our members and consumers, stressing that this scheme is not viable and should not continue.
Mark Evans is president of the Law Society of England and Wales
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