Client Account Interest Ruled Out of Legal Aid Budget

The Ministry of Justice has decided not to pursue plans to use the interest generated from firms’ client accounts to help fund the legal aid budget.  This decision particularly impacts on conveyancers as why should a conveyancer pay for a legal aid matter?
The Law Society’s proposal that firms have already been using the interest from client accounts to benefit legal aid clients was ‘given considerable weight,’ by the Ministry of Justice.  It was pointed out that the interest gained was also used to help legal aid clients indirectly by funding other pro bono and charitable work.
Richard Miller, head of legal policy at the Law Society considered that, “In all the bad news it is at least good that the government has decided not to continue with this proposal, which we had considered misguided and liable to cost more than it would generate.”
Unfortunately a separate measure was disclosed in documents accompanying the bill which will result in the government taking 25% of all general damages awarded to clients receiving legal aid.  Miller said:  “The effect of this is that where a legally aided claim is settled for a sum of £10,000 and the costs are £1,000, the success fee taken by the supplementary legal aid scheme will be £2,500, or 250% of the basic costs.  The Law Society considers that this is deeply unjust. Moreover, it will mean that it is in a client’s interests to spend thousands of pounds more on a case in order to generate a few hundred pounds in additional damages. It will therefore discourage settlements.”
Bill Montague, co-chair of the Legal Aid Practitioners Group, said the proposal was an ‘irrational windfall for the legal aid fund’.
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