Page 271 - IOM Law Society Rules Book

ADVOCATES ACCOUNTS RULES 2008

the money was held in a general client account may as a result be £20 or less. A sum in lieu
of interest should, however, be paid if it is fair and reasonable in the circumstances to do so.

(6) (a) If an advocate holds money for a client (or person funding all or part of an
advocate’s fees) in an account opened on the instructions of the client (or that
person) under rule 16(1)(a), an advocate must account to the client (or that
person) for all interest earned on the account.

(b) If an advocate has failed to comply with instructions to open an account under
rule 16(1)(a), an advocate must account to the client (or the person funding all
or part of an advocate’s fees) for a sum in lieu of any net loss of interest
suffered by the client (or that person) as a result.

(7) This rule does not apply to controlled trust money.

Notes
Requirement to pay interest
(i) The whole of the interest earned on a separate designated client account must be
credited to the account. However, the obligation to pay a sum in lieu of interest for
amounts held in a general client account is subject to the de minimis provisions in rule
24(3)(a) and (b). Section 5 of the Advocates Act 1976 permits advocates to retain any
interest earned on client money held in a general client account over and above that
which they have to pay under the rules. (See also note (viii) to rule 15 on aggregation
of accounts).
(ii) There is no requirement to pay a sum in lieu of interest on money held on instructions
under rule 16(1)(a) in a manner which attracts no interest.
(iii) Accounts opened in the client’s name under rule 16(1)(b) (whether operated by the
advocate or not) are not subject to rule 24, as the money is not held by the advocate.
All interest earned belongs to the client. The same applies to any account in the
client’s own name operated by the advocate as signatory under rule 11.
(iv) Money subject to a trust which is not a controlled trust is client money (see rule 13, note
(vii)), and rule 24 therefore applies to it.

De minimis provisions (rule 24(3)(a) and (b))
(v) The sum in lieu of interest is calculated over the whole period for which money is held
(see rule 25(2)); if this sum is £20 or less, the advocate need not account to the client.
If sums of money are held in relation to separate matters for the same client, it is
normally appropriate to treat the money relating to the different matters separately, so
that, if any of the sums calculated is £20 or less, no sum in lieu of interest is payable.
There will, however, be cases when the matters are so closely related that they ought
to be considered together – for example, when an advocate is acting for a client in
connection with numerous debt collection matters.
Administrative charges
(vi) It is not improper to charge a reasonable fee for the handling of client money when the
service provided is out of the ordinary.
Unpresented cheques

(vii) A client may fail to present a cheque to his or her bank account for payment. Whether or
not it is reasonable to recalculate the amount due will depend on all the circumstances
of the case. A reasonable charge may be made for any extra work carried out if the
advocate is legally entitled to make such a charge.

Rule 24 – When interest must be paid page 28