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Rule 7: Payment of interest
i
You account to clients or third parties for a fair sum of interest on any client money held by you on their behalf.
You may by a written agreement come to a different arrangement with the client or the third party for whom the money is held as to the payment of interest, but you must provide sufficient information to enable them to give informed consent.
Alnwick needs to speak to their COFA!
Knights have been saying this for over 12 months:-
Full year outlook underpinned by increased interest income on client account monies driven by interest rates returning to normal levels..
This from recent results:
"with a noticeable increase in the interest income earned on client monies, net of interest paid out to clients which we expect to continue with interest rates having reverted to higher historic norms. "
"Other operating income
Here is the figure:
Other operating income has increased to £6.7m from £1.3m, primarily due to increased interest income earned on client monies held as a result of higher interest rates, net of interest paid out to clients."
However, it is also fair to pint out that high interest rates have also curtailed some of the business.
"Given the sharp rises in interest rates as we started the current financial year, we are seeing a softening of work in some transactional and debt-reliant activity such as Residential Property,"
Yes, it does. Most large law firms will receive and then transfer out millions of pounds every day, meaning most will have a huge revolving credit in their client account, and on the basis that most is only held for a day or so as part of a conveyancing or other transaction the law firm will be able to keep most of it - and only account where the sums held are huge or held for a period of more than a few days - the latter of which would have to be justified to avoid potentially breaching solicitors accounts rules which prohibit providing banking services.
Alnwick, see https://www.sra.org.uk/solicitors/standards-regulations/accounts-rules/ rule 7.1 and rule 7.2, which requires a firm to account for a fair sum of interest on any client money but allows with consent of client to come to a written agreement to come to a different arrangement.
Does this not allow a firm to retain some element of interest income?
Client accounts
A client account is a practice’s account used for holding client money. It must:
be a bank or building society account
be held at a branch or head office in England or Wales
include the name of the relevant law firm or sole practitioner in the name of the account
include the word ‘client’ in the name of the account
A firm may have a separate designated account for a single client, or a general account that it uses for more than one client.
Alnwick,
If that’s true then I’m misinformed. I must have made the wrong assumption when this was stated in the Half Year Report, in January -
Current trading and Outlook
· Focussed on improving organic growth; driven by improved margins, improving productivity and investment in more profitable fee earners
· Full year outlook underpinned by increased interest income on client account monies driven by interest rates returning to normal levels
· Macroeconomic outlook likely to support recruitment momentum and acquisition opportunities; highly selective approach to assessing future acquisition targets.
Regards
Law Firms do not make a penny on deposits in Client Accounts. It’s against the Law.
I know this as I have a law firm !
HumpyDumpy
Posted in: 888
Posts: 178
Price: 104.80
No Opinion
RE: Almost $2bn in net debt, fundamentals no better7 Jun 2023 13:10
I agree with you on the debt Terry but, quite frankly, who gives a toss about that at the mo. If you’re in, you’ve just made a ton of money on paper with very real prospects for lots more. Continuing to bang the drum today on debt just looks like sour grapes.
come on humpy, answer the question. let’s talk about your history - created a new account just over a year ago and immediately went after knights. right after the big drop. lose a lot of money here did we and bitter? what was your previous moniker?
would you also like to meet up and discuss the ****** comment, over a coffee?
Can't be bothered to communicate further with you I'm afraid Pompal. From your posting history, you just appear to be a t*sser and life is too short.
Humpty, let’s talk about naive comments, or deliberately misleading statements?
You say that Knights are paying a fortune for their debt? Please tell us what the rates are for the £60m revolving facility, which is effectively the same interest as the previous £40m facility. I’ll wait.
Oh and they are earning very well on customer account monies. You read the RNS’s, yes??
Each to their own Saab. Time will tell, but I think the cost of servicing all that debt in a slowing market will have a big impact over the next 12 months. Good luck.
Law firms thrive on attracting talent. - Do they? The times I needed a solicitor, I wasn't able to verify their talent. Not being a legal expert. I expect this type of set up probably thrives on being competitive to their customers. I dont really read ROF, except if it is RBGP, and I want something really seedy.
I’d sooner make my investment decisions based on Full Year Results than “RoF” as I think the numbers speak for themselves.
A very naive statement. Law firms thrive on attracting talent. There’s no way they are attracting talent. They have a terrible reputation - as can be seen on RoF which is probably the most widely read legal website by lawyers. FFS did you see the article about the emails they sent to staff about pay rises!!! Beggars belief. But the debt will be what seals the deal ultimately. Well run law firms are earning a fortune from their client account deposits at the moment, not paying a fortune for debt.
Sorry QuietBee, maybe it’s confirmation bias but I read the articles in ROF and the Law Society Gazette and would conclude that if you’re looking for a company that’s hell bent on growing revenue and maximising profits, KGH are a pretty good buy.
You’re Katie aren’t you, QuietBee? Axe to grind. 👍🏼
New account yesterday. First and only post. Yeah okay then. Fading real fast. Embarrassing 🙄
Read recent ROF and Law Society Gazette. Interesting! Momentum fading fast
Significant % increases in revenue, PBT, EPS and final dividend (and only a very small increase in debt). I’m amazed the SP is languishing at 70-something pence when it should be well north of £1!
Good news here. Still holding.
This looks good to me a clear indication that the strategy is working well.
Expecting there to be positive read across from DWF offer news too
Delighted with a very good performance last year.
The Debt to Profit ratio has fallen sharply and the integration of recent acquisitions is proving to be very successful.
Knights share price was £4.50 18 months ago
The current price is £0.68p !!!
I’m buying more.
Best Wishes