Tories pledge early action to consolidate client accounts to earn interest for legal aid

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By Legal Futures

7 April 2010


France: Carpa scheme inspires Tories to look at using client account interest

The Conser-vatives will move quickly if elected to consult on plans to consolidate all solicitor client accounts in one place and apply the interest that accrues to the legal aid fund, Legal Futures can reveal.

The idea, based on the French Carpa, aims to bring in new funds for legal aid. Shadow justice minister Henry Bellingham told Legal Futures that clients and solicitors would continue to claim the interest they currently receive on client account money, but that the extra interest from bringing all client accounts together in one place would go towards legal aid.

“It’s not taking money away from anyone,” Mr Bellingham explained. “It’s conjuring money up from the markets.”

The government initiated a review of legal aid shortly before the election was called, but Mr Bellingham said “we’re going to give that added momentum and pressure” if elected, with a consultation paper issued in “the early months” of a Conservative administration.

One of the major banks would run the client account scheme, with the fund underwritten by the government to ensure it is secure. Mr Bellingham said a side-effect would be to reduce or eliminate money laundering concerns around client accounts and also the dangers of putting client money in unstable banks. “There is a huge amount of work to be done on the detail,” he added. Smaller firms could be exempted.

Mr Bellingham also said solicitors would not lose their relationship with their local bank manager because such relationships no longer exist. They would have access to the money as they do now.

This is one of various strategies the Conservatives are investigating to inject fresh funds into a legal aid budget that will otherwise not be increasing. Others include a conditional legal aid fund and levying a small charge on everyone convicted of a criminal offence. “If we don’t get new money in from the outside, we are going to reach a real pressure point,” Mr Bellingham said.

To learn more about the Carpa, see www.unca.fr/carpa-anglais.htm.

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