Do Solicitors Keep Interest on Client Accounts?

The Short Answer

Solicitors hold your money in a client account and, in most cases, that account earns interest. Under Rule 7 of the SRA Accounts Rules 2019, your solicitor must account to you for a fair sum of interest on money held on your behalf. They are not required to pay you every penny of interest, but they cannot simply keep it all either.

The key word is "fair". Fairness is assessed by two things working together: how much money was held, and for how long. A modest sum held for a few days is unlikely to produce interest you would reasonably expect to receive. A large sum held for several months almost certainly will.

Whose Money Is It?

When you instruct a solicitor, money you pay to them (a deposit in a property transaction, litigation funds, estate proceeds during probate) stays yours. The solicitor holds it in a separate client account, which is legally distinct from the firm's own money. The solicitor cannot spend it on running the firm, and if the firm became insolvent, those funds would be protected.

Because the money is yours, any interest it earns is also yours in principle. The SRA rules build on this: they require the solicitor to account to you for a fair portion of that interest rather than treating it as a perk of holding client money.

For a fuller explanation of the difference between a client account and the firm's own account, see our guide to office account versus client account.

How the SRA's Fair-Sum Rule Works

Rule 7.1 of the SRA Accounts Rules 2019 states that a solicitor must "account to clients or third parties for a fair sum of interest on any client money held by you on their behalf". The rule does not set a fixed interest rate or a precise formula. Instead, it sets a fairness standard and leaves each firm to translate that into a written policy.

That policy will include a de minimis threshold: a minimum level of interest below which the firm retains the amount rather than paying it to the client. The SRA does not prescribe what this figure should be. Each firm sets its own, and it must be justifiable by reference to the administrative cost of calculating and paying very small sums. A sensible de minimis might be a figure in single digits or low tens of pounds per matter. A threshold set high enough to absorb interest a client would clearly regard as theirs is not defensible under the rules.

Where the interest accrued on your money exceeds the firm's de minimis, they must pay you that fair sum. Where it falls below, they may retain it and treat it as the firm's income.

One important caveat: Rule 7.2 allows you and your solicitor to agree in writing to a different arrangement, including that interest will be dealt with in another way. Firms sometimes include such terms in their standard terms of business, so it is worth checking your client care letter. Any such agreement should have been explained to you clearly enough for you to give informed consent.

When Will I Actually Receive Interest?

It depends on the size of the sum held and the duration. A few practical examples illustrate how this plays out:

• Exchange deposit on a house purchase, held for two to four weeks. On a typical deposit the interest accrual over that period is likely to fall below most firms' de minimis. You would not normally receive a payment.
• Completion funds held overnight. The sum is large but the period is very short. The interest accrual is minimal and would typically fall below the de minimis.
• A litigation settlement held for several months pending distribution. A material sum held for a significant period produces a real interest accrual. A defensible de minimis would not cover it. You should expect to receive something.
• Probate estate funds held during a lengthy administration. This is where the interest obligation bites hardest. See the probate section below.

The takeaway is that the duration of the hold is not the only thing that matters. A large balance held briefly can produce interest that is clearly fair to pay; a tiny balance held for months may not. Both factors work together.

Designated Deposit Accounts: Getting the Full Rate

When a solicitor holds a larger sum for a longer period, they can open a separate designated deposit account at a bank, set up specifically for your matter. Rather than pooling your money with all other clients, your funds sit in their own account and attract the interest rate the bank pays on that deposit. All of that interest belongs to you.

A designated account makes sense where the sum is substantial and will be held for several months, for example during a probate administration, a long conveyancing chain, or an ongoing litigation. The interest rate on a designated account is typically higher than the notional share of interest you would receive from a pooled client account.

Your solicitor is not automatically obliged to open a designated account. If you think the amount and duration of your matter warrant it, you are entitled to raise this with your solicitor and ask whether they will use one. They should be able to explain their approach.

Probate and Estate Administration: A Special Case

Probate matters routinely hold the largest sums of any everyday legal transaction. A typical estate administration brings together bank and savings accounts, investment redemptions and property sale proceeds, all held in client account while the grant of probate is obtained, assets are gathered, inheritance tax is settled and the administration concludes. It is common for six-figure sums to sit in a client account for six months or more.

At that scale, the interest obligation is real and material. The SRA has identified probate and estate administration as a high-risk area for client money handling, partly because of the size and duration of the balances involved.

As an executor or as a beneficiary of an estate being administered by a solicitor, you are entitled to expect that the solicitor will account for a fair sum of interest on estate funds. If the estate holds a large sum for many months, a designated deposit account is often the most straightforward way to ensure all interest goes to the estate rather than being absorbed by the firm.

If you are an executor, ask at the outset what the firm's interest policy is and whether they will use a designated account for the estate funds. This is a reasonable and routine question.

What Your Solicitor Is Required to Tell You

The SRA expects firms to have a written interest policy, and SRA guidance makes clear clients should be informed of it, normally in your client care letter or terms of business at the start of the retainer. If the firm asks you to agree to a different interest arrangement under Rule 7.2, that agreement must be in writing and made with your informed consent. The information you receive should cover:

• That interest will be calculated on your money
• The de minimis threshold below which interest is retained by the firm
• How the firm calculates interest (the reference rate and the method)
• Whether a designated deposit account is available and in what circumstances

If you did not receive this information at the outset, or if you cannot locate it in your client care letter, you are entitled to ask for it in writing at any point during your matter.

What to Ask Your Solicitor

If you want to understand what happened to interest on your money, or to make sure you receive what you are entitled to on a current matter, these questions are straightforward and reasonable to raise:

1. What is your written interest policy? Ask for a copy. Every firm that holds client money should have one.
2. What de minimis threshold do you use? This tells you the level at which interest starts flowing to you rather than staying with the firm.
3. What reference rate do you apply? This determines how interest is calculated on your balance.
4. Will you open a designated deposit account for my matter? Relevant where the sum is large and the duration significant.
5. Can you provide a calculation showing what interest accrued on my money? If your matter is concluded and you did not receive an interest payment, ask for the calculation showing the accrual and whether it fell below the de minimis.

A reputable firm will answer these questions without difficulty. If you receive a vague or dismissive response, you can raise a formal complaint with the firm first, and thereafter with the Legal Ombudsman if you remain dissatisfied.

What If You Think You Were Owed Interest That Was Not Paid?

Start by reviewing your final account or bill. Interest, where paid, should be itemised. If you believe interest was due and was not accounted for, write to your solicitor and ask for a written explanation of how interest was calculated on your matter and why a payment was or was not made.

If the firm's response does not satisfy you, you can escalate to the firm's complaints procedure (they are required to have one) and, if that does not resolve the matter, to the Legal Ombudsman. The Ombudsman can look at whether the firm's interest policy was fair and properly applied.

Note that the SRA does not handle individual consumer complaints about money owed. Its role is regulatory. Consumer redress for unpaid interest is via the Legal Ombudsman.

Further Reading

If you want to understand the mechanics behind how solicitors manage client money and apply Rule 7, our companion guide written for solicitors covers the detail: how a law firm handles client money interest under SRA Rule 7. It explains the de minimis policy, how interest is calculated, and how it flows between the client and office account.

For broader context on how client accounts work and why they are separate from the firm's own money, see office account versus client account: what is the difference.