Still Using a Client Account? You May Not Need To.

Many UK law firms continue to operate client accounts simply because it’s how they’ve always handled client funds — especially for unpaid fees or disbursements. But under the latest SRA Accounts Rules, there are scenarios where maintaining a client account is no longer necessary.

Let’s explore when you can legally and safely operate without one — and how it can benefit your firm.

When Can You Avoid a Client Account?

If all the following apply, your firm is not required to hold funds in a client account:

• You only receive money for fees or unpaid disbursements before issuing a bill;
• Those disbursements are incurred on the client’s behalf and your firm is liable for them;
• You do not receive any other type of client money or operate under regulations requiring a client account;
• You inform the client in advance (via the engagement letter or client care letter) where their funds will be held.

Important: Always refer to the latest SRA Accounts Rules to ensure full compliance.

https://www.sra.org.uk/solicitors/standards-regulations/accounts-rules/

The Hidden Cost of Keeping a Client Account

Maintaining a client account isn’t just about compliance — it’s also about time, cost, and risk. It involves:

• Monthly bank reconciliations and approvals
• Monitoring balances to avoid overdrafts
• Keeping client ledgers up to date every five weeks

These admin tasks drain valuable time and resources — and they’re often unnecessary.

A Simpler, Smarter Alternative

Here’s what your firm can do instead:

• Clearly explain in your client care letter how and where funds will be held.
• Ensure your internal processes meet SRA compliance standards without needing a separate client account.
• Free up your finance team to focus on real value — not red tape.

How We Help Law Firms Like Yours

At My Legal Cashier Ltd, we help law firms transition away from traditional client accounts where they’re not required.

We’ll take care of:

• Ensuring full SRA compliance
• Designing efficient systems for money handling
• Delivering a smooth, low-risk transition that saves time and money

Want to find out if your firm can ditch the client account?
Call us on 020 3598 4327 or
Email [email protected]

Let’s simplify your compliance — so you can focus on what you do best: looking after your clients.

Written by:
Muhammad Zameer, FCCA
Legal Accounts Expert, My Legal Cashier Ltd

Secure the cash your law firm needs!

• Covid-19 is going to affect your cash inflow so it’s essential you pull out that cash flow spreadsheet and work out how if you will have enough cash to keep your business going for the next 6-12 months. If the answer is ‘No’, then it’s time you act now and secure the cash you need before it’s too late.
• Consumers are staying home and not spending. Discretionary spending appears to have collapsed in recent days.
• SMEs are finding cash to stay afloat and meet their fixed overheads so no extra spending from this sector
• Bank of England reduced interest rate to 0.1% to cut cost of borrowing but there is a limit to what this can do as Covid-19 affects both sides of the economy: supply and demand. The supply of goods and services is impaired because factories and offices are shut and output falls as a result. But demand also falls because consumers stay at home and stop spending, and businesses mothball investment.

How to arrange cash

1. Speak to friends and family and make use of that extra cash sitting in their bank account.
2. Try to speak to your regular suppliers and ask for 3-6 months of payment holidays. This gives you interest free credit.
3. Contact HMRC on 0800 0159 559 and request time to pay taxes already due or becoming due soon. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. However, it’s highly likely that these arrangements will offer interest free credit.
4. If your business pays no or little business rates because of small business rate relief (SBBR), you might be eligible for £10k cash grant from your local authority. If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority. You do not need to apply. Funding for the scheme will be provided to local authorities by government in early April.
5. Most of the small businesses will finally resort to Coronavirus Business Interruption Loan Scheme (CBILS) to keep the business going. These loans/overdrafts are provided by the British Business Bank through banks with no interest for the first six months. Finance terms are from three months to 10 years.

TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST:

• Be UK based, with turnover of no more than £41 million per annum
• Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – click here
• Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
• Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements
• Full eligibility criteria will be published by the Government shortly

If you have exhausted all the possible options and are planning to approach banks for a loan, then please ensure that you have a sound borrowing proposal as it is one of the key eligibility criteria. Please do not hesitate to contact My Legal Cashier if you need any assistance in preparing your borrowing proposal. We will assist you in preparing cash flow forecasts to work out how much cash is required over the next 12 months to keep your business going and approach banks with a sound borrowing proposal to secure the cash you need.

Remember, these loans are backed up by 80% Government guarantee, so you don’t need personal security to secure these loans, however you do need a sound borrowing proposal.

Please contact My Legal Cashier on 020 3598 4327 for further advice.