The Gazette 1976

GAZETTE

JUNE/JULY 1976

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;

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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