A&O set to donate £60,000 in interest from client accounts

Allen & Overy (A&O) expects to have donated almost £60,000 by the New Year through its new scheme to direct interest on client accounts to London’s voluntary legal sector. It recently paid £14,000 to the London Legal Support Trust, which represents two months’ interest. The firm anticipates that a further payment in the region of £45,000 will be made on 1 January.

In May, A&O announced the initiative as a response to the legal aid “crisis”. It pointed out that the number of high street firms doing civil legal aid work had shrunk by 14 per cent in the last two years and the number of people helped had decreased by 28 per cent. This created “advice deserts”, where those “most in need have no access to civil legal aid and, ultimately, justice”.

The scheme works on the basis that most firms, when placing client monies on deposit, generate a return by consolidating those sums. The interest exceeds the interest payable in respect of each tranche of client monies. The excess over the amount payable to the client under the solicitors’ accounts rules is properly retained. “We hope this simple voluntary model will be considered by other firms with more than 20 partners,” says Guy Beringer, senior partner at A&O.

So far other firms have not signed up – although they are all supportive. “We’re still enthusiastic about others following our lead, but I don’t want to appear to be telling them what to do – as history shows, that doesn’t go down terribly well,” says Beringer.

Patrick Farrell, the pro bono partner at Norton Rose, is an enthusiastic supporter in principle, but he points out that his firm has always regarded the sums as the clients’. His firm’s banking system pays any such sums directly back to the client. Another City pro bono partner has reservations about the practicalities. “It’s a pity the press take on it’s been that the scheme is something of a gauntlet that A&O’s thrown down,” he says. “I think even A&O accepts that the calculation is virtually impossible, and in a sense that’s the gimmick that is the sales pitch for a generous gesture. But I don’t think they’re saying they have precisely computed that top slice of interest they’re entitled to keep over and above the minimum which is the property of the clients.” His firm also treats the interest as belonging to the client.

There was more support for a new initiative being led by Lovells – to donate dormant client funds to pro bono projects. “It isn’t going to be a recurring amount, but it would be a good once-and-for-all contribution and we would be every enthusiastic about it,” says Beringer. Each of these schemes has procedural issues, he acknowledges. On the dormant accounts, he says: “There needs to be some underpinning of the insurance if clients turn up and say they haven’t had their money for 15 years”, even if “that’s unlikely to happen”.

Michael Smyth, pro bono partner at Clifford Chance, is also positive about the Lovells idea. “It chimes with a bigger initiative that the Chancellor, Gordon Brown, is keen to pursue, because there are apparently billions of pounds located in old granny accounts up and down the country which lie dormant, and if they could be hypothecated to a decent charitable purpose, that could make a real difference,” he says.