Government plans to raid the interest generated on law firms’ client accounts would be another attack on the beleaguered civil justice system, APIL says.
The Ministry of Justice (MoJ) wants to take between 50 and 75 per cent of the interest generated on lawyers’ client accounts to help pay for the justice system in England and Wales. APIL (the Association of Personal Injury Lawyers) has responded to a consultation by the MoJ about the proposal.
“It’s wrong to assume this is somehow ‘free money’. The MoJ taking a share of generated interest would amount to a stealth tax on the general public seeking legal advice, including vulnerable victims of negligence seeking redress,” said John McQuater from APIL.
“In the personal injury sector money is not kept in client accounts for long periods,” he explained.
“The proposed scheme could have serious implications for law firms, especially smaller ones, which use any retained interest from client accounts to, for example, offset overdraft charges and provide funding models that are more beneficial to clients,” he added.
“Injured people have been on the wrong end of 25 years of reform which have undermined access to justice and eaten away at the principle of full and fair compensation,” he said.
“There does not appear to be any commitment by the MoJ, if the proposal went ahead, to use funds raised in a way that would benefit those relying on the civil justice system,” he added.
The cost of administering the scheme, for firms and the MoJ, is also likely to be a considerable burden, said Mr McQuater.