Government plan seen as attack on justice system

The UK government’s proposal to confiscate a significant portion of interest generated on lawyers’ client accounts has prompted strong reactions from legal experts. The Ministry of Justice (MoJ) suggests that it could take between 50 and 75 per cent of the generated interest to support the justice system in England and Wales. However, the Association of Personal Injury Lawyers (APIL) has issued a stern warning, describing the plan as another assault on the already struggling civil justice framework. In a recent consultation response, John McQuater from APIL remarked “It’s wrong to assume this is somehow ‘free money’. The MoJ taking a share of generated interest would amount to a stealth tax on the general public seeking legal advice, including vulnerable victims of negligence seeking redress.”

McQuater further articulated that the personal injury sector does not typically hold funds in client accounts for extended periods, therefore reducing the amount of interest that could be captured. He stated “In the personal injury sector money is not kept in client accounts for long periods,” emphasising the fleeting nature of these funds. The implications of the proposed plan could be particularly detrimental to smaller law firms, which rely on any retained interest from client accounts to help manage operational costs such as overdraft charges, as well as to create funding models that ultimately benefit clients.

According to McQuater, this represents a profound concern, especially when considering that “Injured people have been on the wrong end of 25 years of reform which have undermined access to justice and eaten away at the principle of full and fair compensation.” The apprehensions extend to the potential administration costs of the scheme, which may become a considerable burden for both the law firms and the MoJ. He observed that there does not appear to be any commitment from the MoJ on using the funds raised in a manner that would support individuals relying on the civil justice system, leading to calls for a comprehensive reevaluation of the proposal in light of its potential consequences.