After completing a property transaction worth £1,500,000, the solicitor received information from the bank that £175 interest had accrued on client funds held in a client account. Additionally, there is an outstanding bill of £1,500 plus VAT for professional services and disbursements of £75.
Which of the following statements is false with respect to the accrued interest?
After completing a property transaction worth £1,500,000, the solicitor received information from the bank that £175 interest had accrued on client funds held in a client account. Additionally, there is an outstanding bill of £1,500 plus VAT for professional services and disbursements of £75.
Which of the following statements is false with respect to the accrued interest?
The solicitor must always account to the client for all of the interest accrued on the client's funds.
(D)It is a misconception that a solicitor must always account to their client for all interest earned. The SRA Accounts Rules specify that a solicitor should account for a reasonable amount of interest unless the client has agreed to a different arrangement.
Options (A) and (B) are correct because a solicitor may choose to offset any interest payments against other amounts owed by the client to the firm, such as payment of bills.
Option (C) is also correct because a solicitor and their client can agree to opt out of the rules regarding payment of interest.
Finally, option (E) is true as the solicitor should always account to the client for a fair sum of interest.