The Gazette 1976

JUNE/JULY 1976

GAZETTE

3. "Solicitors, when they act as stakeholders, are entitled to retain interest in this capacity". This is a separate point which does not affect the argument but in any event there can be no logical ground for a change in the law in this respect designed only to apply to solicitors. 4. "Some of the money held by solicitors for clients is on account of bills that have not yet been delivered". Th at is a fair point, more particularly so by reason of the special statutory provisions and delays in pay- ment of their bills. Solicitors' overhead expenses con- tinue unabated and every receipt is very important to maintain an adequate cash flow. 5. "Solicitors only hold some of clients' money on deposit account". Under present English law and practice, moneys held by a solicitor in his client account, are, in the absence of an arrangement with his client, repayable on demand. Banks will not normally pay interest unless a sum is deposited for a minimum of seven days. 6. " The volume of interest on client account will vary f r om year to year with the economic position of the profession and the country as a whole". This must undoubtedly be true to an extent and the article suggests that if, under the suggested legislation, the global income was used for say L aw Centres, the dangers of fluctuation could be extremely unfortunate; that summarises the lot of solicitors. 7. "Interest on client account is now taxed at the highest rate earned by the partners as unearned in- come and a large proportion of it, therefore, goes to the Revenue already". Th at argument carried to its logical conclusion ex- tends to all income whether earned or not; so why does anyone bother anyway? The fallacy is that a great majority of the practising solicitors are not such rela- tively high taxpayers and the net income received is very important to them. In any event the cash flow considerations are just as, if not more, important to them. 8. " The aggregate of moneys earned on client account would be a mere d r op in the bucket of legal aid funds generally". Once again, Mr. Zander's article assumes that pro- ceeds would be applied towards the cost of legal aid or the provision of legal services outside the Legal Aid Scheme. The political threat to the independence of the legal profession as a whole creates not unnaturally a grave fear in the minds of many, if not all, its mem- bers; the failure of successive governments to maintain the impetus of the Legal Aid Scheme is a matter of regret but it remains a national responsibility.

9. "Solicitors cannot afford to lose this income". This is dismissed by Mr. Zander because he says it is not critical to the principle at issue. Solicitors are not as mercenary as sometimes implied. Inasmuch as those solicitors receiving deposit interest regard it as a con- tribution towards dead overheads, they would un- doubtedly, if deprived of that source of income, seek to recover it elsewhere by making additional charges to their clients wherever practical so to do; they do not normally make specific charges for handling moneys etc., but regard it as a back-up service to the subject matter of their particular retainer. In short, the cost of services to the clientele of solicitors as a whole would be bound to increase. True and fair inferences f r om statistical information available are difficult to draw but one factor is certain — for many solicitors it is not only their real income in terms of purchasing power that is substantially diminished but their actual income is currently on the decline. They labour under many statutory requirements with which it is increasingly expensive to comply: (a) Compensation Fund contributions; (b) Practising Certificate fees; (c) The cost of a strict compliance with the Solicitors Account Rules; (d) The cost of compliance with the Solicitors In- demnity Rules. The burdens and responsibilities, both professional and administrative, of their practice — borne for the most part with great conscientiousness — demonstrate the devotion of solicitors to their profession and their firm belief is not only the Rule of Law but also the absolute independence in the role of law of their pro- fessional existence. Th e Law Society strains every limb to maintain pro- fessional standards and equally it should defend to the hilt every aspect of professional independence. Conclusion Inasmuch as the English legal profession has already discharged and will continue to discharge its public responsibilities having made substantial provision in those areas which Commonwealth legislation was de- signed to make, there is no case for altering the existing position in relation to solicitors' entitlement to deposit interest and even less reason for selecting them for special treatment to extract money for what is a Gov- ernment responsibility. (Reprinted by kind permission of the Author and of the Editor of the New Law Journal - 20 May 1976).

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