The SME & Boutique Law Firm Alliance is opposing Government proposals to take a significant proportion of the interest generated on solicitors’ client accounts to fund the justice system.
We believe the proposals are fundamentally unfair and risk serious unintended consequences. Law firms bear the cost, regulatory burden and risk of holding client money safely. Removing the income generated by those accounts will disproportionately affect SME, high-street and owner-managed firms, potentially increasing legal fees, accelerating consolidation and firm closures, and ultimately reducing access to justice and diversity within the profession.
We are also concerned that the proposals could push firms towards Third Party Managed Accounts or even unregulated structures, despite the potential implications for cost, efficiency and consumer protection.
The Alliance supports proper investment in the justice system, but private law firms should not be required to prop up failures in public funding at the expense of their own sustainability and the communities they serve.
We are calling on Government to pause the proposals, publish proper financial, equality and access-to-justice impact assessments, meaningfully engage with the profession, and consider the consultation evidence before taking any further action.