Barristers using the new escrow account so they can deal with client money will not retain any interest, it has emerged.
The Bar Council’s BARCO scheme, announced last week, should also prove difficult to defraud, according to the man who has led its development.
Speaking to Legal Futures at the formal launch of BARCO, Paul Mosson – the Bar Council’s head of member services – explained that if interest were not returned to clients, it would turn BARCO from a payment institution into a bank, with all the heavy regulation that would ensue.
He said “it would need a lot of collusion”, including from BARCO staff, to defraud the scheme; it is insured against incompetence and criminal action. Greater risks are money laundering and sham litigation. Mr Mosson said the advantage of the escrow account over solicitors’ client accounts is that it “protects everyone’s interests”.
Barristers wishing to use the scheme will have to incorporate its standard contract in their own terms and conditions; part of this is that all money passing from the client, including legal fees, has to go through the account. The contract has to be sent to BARCO and if it is not received within 48 hours of the money being transferred, it will be returned.
When the barrister gives an instruction to pay out money, the client will be notified and, absent their express approval, will have five days to dispute it. Mr Mosson said one of the goals of the pilot that is to take place over the next few months will be to determine a level of funds to be paid out at which express authority will be automatically required.
There will be an as-yet undetermined percentage charge on the barrister’s fees when they are paid, capped at £250 per transaction. Mr Mosson said that in the medium term the Bar Council hopes to raise a surplus off this fee to make a profit for the Bar Council and keep practising fees down.
“I’m very excited by [BARCO],” he said. “It’s a fantastic opportunity for a lot of barristers to look at modernising and diversifying their practice without having to change.”