Client Money Management: Choosing the Right Tool for the Job
The SRA’s recent consultation on client accounts didn’t mandate change, but it did clarify something important: there’s no single “right way” to manage client money. The key is understanding which approach fits which scenario.
For many firms, the challenge isn’t whether to use a client account—it’s knowing when alternatives might be more appropriate.
Different Transactions, Different Needs
Think of client money management as a toolkit rather than a one-size-fits-all solution. Each approach serves different purposes:
Traditional Client Accounts remain effective for routine matters—standard disbursements, deposits, and straightforward single-party payments where firms have established workflows and adequate resource.
Escrow Services are purpose-built for transactions requiring neutral third-party holding of funds until conditions are met—property purchases, business acquisitions, or disputed settlements where independent verification is essential.
Paying Agent Solutions streamline complex multi-party disbursements—shareholder payouts, fundraising distributions, or any scenario involving payments across multiple jurisdictions with different verification requirements.
Third-Party Managed Accounts (TPMAs) suit high-value, multi-party, or cross-border matters where automated compliance, enhanced fraud protection, and reduced regulatory exposure add material value—think litigation settlements or M&A transactions.
The Hybrid Reality
Recent data* shows 49% of top UK firms now outsource some client account functions, while 36% have implemented rules on transaction types they’ll facilitate in-house. This selective approach isn’t compromise—it’s pragmatism.
By matching each transaction type to the most appropriate payment mechanism, firms can optimize for efficiency where it matters, maintain control where preferred, and demonstrate enhanced client protection in high-risk scenarios.
Where to Start
Map your typical transactions against these categories. Where do bottlenecks occur? Which matters carry disproportionate risk or consume excessive admin time? The answers often reveal where alternatives warrant exploration.
Want to discuss your firm’s specific payment needs? Contact us at [email protected] or visit shieldpay.com to explore how our payment solutions can support your practice.
*survey conducted by Shieldpay into law firms attitudes to client money – July’25