Does Every Law Firm Still Need a Traditional Client Account?
For most solicitors, the client account is simply part of legal practice.
Whether acting on a conveyancing matter, administering an estate or handling funds connected to a dispute, holding client money has traditionally been viewed as a normal and necessary part of delivering legal services. Many firms have operated in this way for decades.
However, several recent developments suggest that the wider conversation around client money is beginning to change.
The Solicitors Regulation Authority (SRA) has spent the last two years consulting on the future of client money arrangements, including considering alternatives to the traditional model under which solicitors hold client money themselves. The first set of changes are already in place with additional reporting through annual accountant’s reports, and the segregation of compliance activities. The regulator has been clear that it sees client money as an area requiring closer scrutiny and stronger safeguards.
At the same time, the Ministry of Justice has launched its own consultation examining interest generated on lawyers’ client accounts, further highlighting the increasing attention being paid to the role and operation of lawyers’ client accounts within the legal sector.
None of this means that client accounts are going away.
It does, however, raise a reasonable question: when was the last time most firms critically reviewed whether their current approach to client money management remains the best one for their business?
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