Over 150 signatories have lent their support to calls for the Ministry of Justice (MoJ) to review its thinking on plans to remit a proportion of the interest earned on lawyers’ client accounts in England and Wales to the government to invest in wider access to justice, including legal aid.
Fresh from their campaign to force the Solicitors Regulation Authority (SRA) into a rethink over the separation of compliance officers from those with “unilateral decision making in firms” the SME and Boutique and Law Firm Alliance have turned their attentions to the Interest on Lawyers’ Client Account (ILCA) scheme proposed by MoJ earlier this year.
An open letter addressed to Prime Minister Andy Burnham published by the Alliance expresses “profound alarm at proposals to appropriate interest generated on lawyers’ client accounts for general Ministry of Justice funding.”
The letter is signed off by Alliance spokesperson Jade Gani, founder and director of private-client law firm Cire Law.
The letter calls on government not to proceed with the proposals in their current form which could see 75% of the interest generated on pooled client accounts remitted to government. The consultation also included alternative plans on taking 90% or even 100%, together with 50% of the interest generated on individual client accounts.
Describing the proposition as “extraordinary” Gani added the “chronic funding” issues that legal sector faces cannot “fairly or sustainably be addressed by identifying income connected with one heavily regulated group of private businesses and simply diverting it to Government.”
Criticising the lack of detail to date the Alliance said it was “concerned” about the consultation process. Following the closure of the consultation in March 2026 the government said a carefully considered and official response would be provided and there would not be any “pre-empt the eventual form of any scheme.” But the subsequent publication of a Ministry of Justice role appearing to be recruiting for a officials to deliver “sustainable funding for critical justice services and helping ensure access to justice” raised questions about the purpose of the consultation said the letter.
A theme reminiscent of the campaign against the SRA outlined how the proposals could disproportionately impact SME and boutique firms more. “High-street, rural and owner managed firms have far less capacity to absorb the removal of an income stream or the additional administrative costs of a new scheme than the largest legal businesses” said the letter, adding “government’s own consultation acknowledges that smaller providers typically operate on smaller profit margins and that the scheme may impose additional administrative costs.”
One unintended consequence warns the Alliance is the redirection of unreserved legal activities toward the unregulated sector, where the regulated community already compete with businesses that are not subject to the same Accounts Rules, professional indemnity requirements, regulatory scrutiny, Compensation Fund arrangements or wider consumer-protection framework said Gani: “If regulated firms are required to surrender most of the interest generated on client money while bearing all of the cost and responsibility associated with regulation, Government risks creating a financial incentive for legal services to migrate towards unregulated structures. That would be an extraordinary policy outcome: a measure presented as supporting access to justice could simultaneously weaken the regulated legal sector and push consumers towards providers offering fewer regulatory protections.”
The Alliance is joined in its opposition by the Law Society, the Conveyancing Association and the Society of Licensed Conveyancers who have all spoken out against the plans.
All have called for the government not to proceed with the proposals while the consultation remains “unresolved.” Further any “materially revised proposal” should be discussed with the profession with a thorough assessment of impact on different sized firms, practice areas, including the cumulative burden of other regulatory and employment costs.
The letter concludes with a warning the Alliance would explore what “legal remedies… may be available should government proceed”, calling for an urgent meeting with ministers and officials before any final decision is taken.
Open letter to Rt Honourable Andy Burnham Re: Interest on Lawyers’ Client Accounts Scheme (ILCA)
