Solicitors Accounts Interest

Question 1

What are the rules for firms for interest?

Answer 1

1. must account to clients for fair sum on client money
2. can come to own written agreement on when/how interest is paid
3. firms must give enough information for parties to give informed consent
4. firm must have written policy statement to be presented to clients at outset of action

Question 2

What is the firms discretion in deciding on fair amount?

Answer 2

1. Can set min amount to be held by firm for any interest to be paid
2. firm can keep difference in interest received and paid to clients (always)

Question 3

How can firms pay interest to clients?

Answer 3

1. offset from amount owed to firm
2. transfer sum from business account to client account
3. if transaction has ended transfer it directly to client

Question 4

Entries for offsetting interest from amount owed to firm?

Answer 4

Interest Payable Ledger (business side)
- Debit

Client ledger (business)
- credit