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Recently the Law Society has received enquiries regarding solicitors’ obligations in relation to interest on client moneys.

Solicitors should note the following.

• Solicitors shall hold client moneys in an interest-bearing account and account to the client for interest thereon whilst so held, or account for interest on client moneys.
• Solicitors who do not hold client moneys in an interest-bearing account are still required to account to clients for interest on client moneys whether they hold such moneys in an interest-bearing account or not.
• The amount of interest due is calculated as the amount of interest, in excess of €100 ( net of DIRT) which would have been earned had such moneys been held as an individual amount to the credit of an interest bearing dedicated account of the solicitor’s choosing at the bank ( or if more than one bank, the principal bank to the practice of the solicitor) for the period commencing seven days after the receipt by the solicitor of such moneys.
• Solicitors are obliged to hold client moneys in an instant access account to facilitate client account transactions. Accordingly, clients are unlikely to receive as much interest (if any) as they would receive had they invested the funds themselves.
• The Solicitors Accounts Regulations 2023 (S.I. 118 of 2023) do not affect any arrangement in writing, whenever made, between a solicitor and a client as to the application of client moneys received by the solicitor or his or her firm for or on account of that client or interest thereon.
• It is important that a solicitor clearly explains to a client the solicitor’s policy on interest client moneys.

The obligations of solicitors in respect of interest are contained in Regulation 8(1) to (5) of the Solicitors Accounts Regulations 2023, as set out below.

Interest

8 (1) A solicitor shall, in respect of client moneys or insolvency arrangement moneys received by that solicitor for or on behalf of a client or an insolvency arrangement,

(i) hold such moneys in an interest-bearing account and account for interest thereon while so held; or

(ii) account for interest thereon.

Such obligation to account shall be discharged as follows:

(a) where such moneys are held in a dedicated account which is an interest bearing account, by ensuring that all interest which accrues on such account is lodged to the credit of that account as additional, as the case may be client moneys or insolvency arrangement moneys held for or on behalf of that client or insolvency arrangement until such time as they are paid out of such account; and

(b) in all other cases, by accounting for all interest, in excess of €100 (one hundred euro), which would have been earned on such moneys had they been held as an individual amount to the credit of an interest bearing dedicated account of the solicitors choosing at the bank(or if more than one bank, the principal bank) to the practice of the solicitor for the period commencing seven days after the receipt by the solicitor of such moneys and for so long thereafter as they are so held and, where appropriate, paying that interest concerned out of:

(i) general client account up to but not exceeding the amount of interest at that time standing to the credit of the general client account; or

(ii) office account; or

(iii) (immediately following a transfer of the amount due from office account to the general client account) the general client account.

(2) A solicitor shall, within a period of three months or by the next accounting date (whichever is the later) after the date on which an amount of interest has been credited by the bank to an interest bearing general client account either:

(a) transfer from the general client account to office account, the amount of such interest so credited, to the extent it has not already been paid out of general client account by the solicitor to an individual client or clients entitled to be paid interest, or treated as additional client moneys held by the solicitor, and designate such amount transferred as being interest earned on client account; or

(b) credit to the appropriate client ledger account of the individual clients concerned the amount of interest due to those clients and, each such amount so credited to a client ledger account shall thereafter be treated by the solicitor as additional client moneys held by the solicitor for that client.

(3) Where a solicitor holds client moneys or insolvency arrangement moneys in a non-interest bearing account the solicitor has the same obligation to account for interest on those moneys, as if held in an interest bearing account.

(4) Where client moneys are received by a solicitor for or on behalf of a client, the client (without prejudice to any other legal remedy) may refer, any question relating to interest on such client money to the Society, and the Society (after providing reasonable opportunity to the client and to the solicitor to make submissions to the Society on such question) shall determine such question and shall duly notify the client and the solicitor in writing of such determination.

(5) Nothing in this Regulation shall:

(a) affect any arrangement in writing, whenever made, between a solicitor and a client as to the application of client moneys received by the solicitor or his or her firm for or on account of that client or interest thereon;

(b) deprive a solicitor of any legal recourse or right, whether by way of lien, charge or otherwise, that the solicitor may have against client moneys of a client standing to the credit of a client account.

Niall Connors

Registrar of Solicitors and Director of Regulation