Why we oppose the MOJ Proposal targeting Client Interest

Why We Are Opposing the Government’s Proposed ILCA Scheme Jordans Solicitors LLP | 9 March 2026

Today we have submitted our formal response to the Ministry of Justice consultation on the proposed Interest on Lawyers’ Client Accounts (ILCA) scheme.

We oppose the scheme in its entirety.

The Government proposes to take 75% of the interest earned on solicitors’ pooled client accounts, and 50% from individual client accounts, and absorb the money into the MoJ’s general budget.

Unlike the 78 comparable schemes operating worldwide — in the United States, Canada, Australia, France and elsewhere — the funds would not be ringfenced for access to justice or legal aid. Oxford University’s Centre for Socio-Legal Studies has publicly reported that none of those international programmes direct funds into general government coffers. The MoJ’s proposal would make the UK an international outlier.

As a high street firm that undertakes a significant volume of criminal legal aid work, we are acutely aware of what this scheme would mean in practice. Client account interest is not a windfall. It is client money, held on trust. For firms like ours, it plays a critical role in sustaining the delivery of publicly-funded legal services at a time when legal aid rates have long been acknowledged as inadequate. We are not alone in our opposition.

The Law Society of England and Wales has described the proposals as “fundamentally flawed” and “a crude sector-specific tax on clients of legal services.” A number of representative bodies — including the Conveyancing Association, local law societies, and specialist accounting firms — have published responses or raised concerns.

The Access to Justice Foundation has warned that without ringfencing, the scheme could lead to no overall boost for justice funding, or even a reduction, if Treasury simply offsets MoJ allocations accordingly. The evidence base underpinning the proposals is, in our view, unreliable. The Government’s own commissioned research by Pye Tait suggested that most firms would see little or no impact from losing client account interest. Yet NatWest’s Legal Report 2025, authored by PKF Francis Clark and covering 110 firms with combined revenue exceeding £1.8 billion, tells a very different story: at the median, 21% of profit per equity partner arose from interest income, with the upper quartile starting at 35%.

The Law Society’s Financial Benchmarking Survey, as reported by the Law Gazette, showed that removing client interest revealed underlying performance with only a 1.2% rise in profit per equity partner. For many firms, there is simply no margin left. Our response also highlights the cumulative burden that high street firms are now facing.

The ILCA proposal arrives alongside increased employer National Insurance contributions, the SRA’s consultation on strengthening client money safeguards, and the proposed transfer of AML supervision to the FCA. For small legal aid firms, this combination is unsustainable.

We have, however, sought to be constructive.

While our primary position is that the scheme should be withdrawn, we have set out an alternative approach should the Government proceed regardless.

We argue that any scheme must at minimum exempt legal aid providers and small firms, adopt a graduated structure that places the burden on those most able to bear it, and ringfence all funds for access to justice through an independent foundation — as every comparable international scheme does.

The justice system is a public service. It should be funded through general taxation, not through the appropriation of client money from the firms that keep it running. Our full consultation response has been submitted to the Ministry of Justice.