When a firm holds money for a client, that money can earn interest — and the client, not the firm, is generally entitled to a fair share of it. As a solicitor you need to know when interest is owed, how much is fair, and how to record it accurately. Getting this wrong risks both client complaints and a breach of the SRA Accounts Rules, so it pays to be precise.
This lesson takes you through the topic step by step:
- Core Obligation and Interest Policy — the duty to account for a fair sum and what every firm's written interest policy must contain.
- What is a 'Fair Sum'? — the factors that decide how much interest a client is actually owed.
- Types of Client Account and Interest — how interest is treated differently on a general (pooled) account versus a separate designated account.
- Varying the Interest Obligation — when and how the duty to pay interest can be changed by agreement with the client.
- Bookkeeping for Interest — the exact ledger entries for paying interest, whether through the client account or directly to the client.
By the end you'll be able to apply each rule confidently to a real client matter.