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Don't Leave Your Client Account Rates to Chance

Writer's picture: Paul McCluskeyPaul McCluskey

As the economic landscape shifts, law firms face mounting pressure to keep a close eye on the interest rates applied to client accounts. With the Bank of England’s anticipated reduction of its benchmark interest rate from 4.75% to 4.5% on 6th February, the legal sector must brace for further declines in deposit rates. This reduction could significantly impact the earnings from client funds, as many law firms rely on these deposits to generate additional income.


Currently, deposit rates on client funds are already at a disconcerting low, hovering around 1.10%. A further 0.25% cut would push some rates below the 1% threshold, squeezing returns even tighter. It’s worth noting that the rates offered to clients can vary considerably, even within the same banking institution, due to bespoke pricing structures. This discrepancy can leave some law firms at a disadvantage, earning far less on client funds than others merely due to the terms they’ve negotiated—or failed to negotiate—with their banks.


This inconsistency highlights the need for a proactive approach to financial management within law firms. The interest you receive on your client funds should not be left to chance. It’s not enough to accept the rates handed down by banks without question. Instead, firms should seek out strategies and services that enable them to maximise returns on client monies.


At Gemstone Legal, we recognise that the interest your firm earns shouldn’t be a matter of luck or happenstance. By specialising in finance and risk management tailored specifically for the legal sector, we empower law firms to take control of their financial strategy. Our approach involves thoroughly analysing current deposit arrangements and identifying opportunities to secure better rates. This can be particularly valuable in a declining interest rate environment, where even a marginal increase in returns can have a meaningful impact on a firm’s bottom line.


One common mistake many firms make is assuming that large banks will naturally offer the best rates. However, this is often not the case. Smaller or niche financial institutions can sometimes provide more competitive terms, especially when they understand the unique needs of law firms. By casting a wider net and being open to exploring alternative banking relationships, firms can uncover better opportunities to enhance their financial position.


Moreover, understanding the bespoke nature of deposit pricing is crucial. Banks often tailor their offerings based on perceived relationship value or negotiating strength. Without a dedicated strategy, law firms might miss out on favourable rates simply because they haven’t presented themselves as a high-value client. This is where working with a specialist like Gemstone Legal can be transformative. We not only negotiate on your behalf but also position your firm to be seen as a valuable partner, thereby unlocking better financial arrangements.


In the face of anticipated rate cuts, taking action sooner rather than later is key. Evaluating your current arrangements and exploring alternatives could make all the difference. As rates potentially fall below 1%, even a slight improvement can contribute significantly over time, particularly for firms managing large sums in client accounts.


If your law firm is looking to navigate these uncertain times with greater financial confidence, consider partnering with a specialist who understands both the legal and financial worlds. At Gemstone Legal, our expertise lies in ensuring you aren’t leaving money on the table. Don’t let market volatility dictate your earnings—take control and secure the best possible returns for your clients and your firm.


Let’s work together to turn uncertainty into opportunity.

 

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Gemstone Legal is a trading style of Gemstone Legal Ltd, registered at Abbey House, 51 High Street, Saffron Walden, Essex, United Kingdom, CB10 1AF. Company Register number is 12016461. We are registered with the ICO, ZA791611 and you can check via www.ico.org.uk. We will receive commission from lenders. Different lenders pay different amounts depending on different commission models. For transparency our commission model is based on a percentage of the amount you borrow (this is based on the amount borrowed and the risk profile of the business). Further details of the commission model, calculation and amount will be disclosed to you throughout your customer journey.

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