How Long Must Law Firms Keep Client Account Records?

At Towerstone Accountants we provide specialist accountancy services for solicitors and law firms operating under SRA regulation. This article has been written to explain How long must law firms keep client account records in clear practical terms so you understand how the rules apply in day to day practice. Our aim is to help you stay compliant protect client money and make informed financial decisions.

One of the most common compliance questions I am asked by solicitors is deceptively simple. How long do we actually need to keep client account records. The fact this question comes up so often tells you everything you need to know about how complex and high risk this area can be.

Client account records sit at the heart of regulatory compliance for law firms. They are not just bookkeeping paperwork. They are evidence. Evidence that client money has been handled correctly, evidence that rules have been followed, and evidence that the firm can be trusted. When records are missing incomplete or destroyed too early the consequences can be serious even if no money has gone missing.

In this article I will explain how long law firms must keep client account records, what types of records are covered, why the rules exist, and how firms can manage record retention in a practical compliant way. I will approach this from a real world perspective, based on how firms actually operate and how regulators and HMRC look at these records in practice.

Why client account record retention matters so much

Client money is treated differently from almost every other aspect of a law firm’s finances. The regulatory expectation is absolute clarity. Firms must be able to demonstrate at any point that client funds were received held and paid out correctly.

Client account records matter because:

• They protect clients if something goes wrong

• They protect the firm during audits or investigations

• They evidence compliance with regulatory rules

• They support continuity if staff or partners change

• They provide a defence if complaints or disputes arise

Destroying records too early removes that protection. Keeping them properly gives the firm confidence.

The primary regulatory framework

The starting point for record retention is the SRA Accounts Rules. These rules apply to most solicitors’ practices and govern how client money must be handled and recorded.

The regulator expects firms to maintain records that clearly show:

• All client money received

• All payments made from client accounts

• The balance held for each client at any point in time

This expectation is enforced by the Solicitors Regulation Authority and failure to meet it can result in disciplinary action regardless of whether any loss has occurred.

The minimum retention period for client account records

Under the SRA Accounts Rules law firms must keep client account records for a minimum of six years.

This six year period generally runs from the end of the matter or from the date of the last entry relating to the client account, depending on the type of record.

This applies to both paper and electronic records and includes records held by third party systems if those systems are used by the firm.

Types of client account records that must be retained

Client account records cover far more than just bank statements. In practice firms are expected to retain a wide range of documentation.

This includes:

• Client account bank statements

• Client ledgers for each matter

• Cash books and accounting records

• Reconciliations between client ledgers and bank balances

• Records of transfers between office and client accounts

• Documentation supporting receipts and payments

Each of these records contributes to a full audit trail. Missing one element can undermine the whole picture.

Why six years is the standard period

The six year retention period aligns with several other legal and regulatory timeframes in the UK.

It reflects:

• The standard limitation period for many civil claims

• HMRC’s normal enquiry window

• The timeframe within which regulatory reviews commonly occur

By setting a six year minimum the regulator ensures firms can respond to issues that arise long after a matter has technically closed.

Situations where records should be kept longer

While six years is the minimum it is not always sufficient. In practice many firms sensibly keep records for longer in certain situations.

Extended retention is often appropriate where:

• Matters involve trusts or estates

• There are long running disputes or litigation

• Clients are vulnerable or minors

• There is a higher risk of future complaints

• Large sums of client money were involved

In these cases destroying records at the six year mark can expose the firm to unnecessary risk.

Client account records and complaints

One of the most practical reasons to retain client account records is the possibility of a complaint. Complaints do not always arise quickly. Some emerge years later when clients review historic transactions.

When a complaint is raised the firm must be able to demonstrate:

• What money was received

• How it was held

• When it was paid out

• Why it was paid

Without records the firm’s position becomes much harder to defend even if it acted correctly at the time.

Regulatory inspections and investigations

The SRA has the power to inspect client account records during routine visits or investigations. These inspections often involve historic periods rather than current transactions.

Inspectors typically expect firms to produce:

• Complete records for the requested period

• Clear reconciliations

• Evidence of regular oversight

If records have been destroyed too early this can itself be treated as a breach regardless of the underlying conduct.

Interaction with HMRC record keeping rules

Client account records also interact with tax record keeping obligations. While client money itself is not taxable income the way it flows through the firm affects VAT and accounting treatment.

HMRC generally requires business records to be kept for at least six years. This aligns with the SRA position and reinforces the expectation that records are available if queried by HM Revenue & Customs.

Where VAT is involved particularly on disbursements and recharges client account records often form part of HMRC reviews.

Electronic versus paper records

Modern firms increasingly operate digitally. Electronic records are acceptable provided they are complete secure and retrievable.

Best practice includes:

• Ensuring digital records are backed up

• Maintaining access even if software changes

• Protecting records from unauthorised alteration

• Keeping records readable for the full retention period

Destroying paper records after scanning is usually acceptable but only if the digital copies are clear and reliable.

Who is responsible for record retention

Ultimately responsibility sits with the firm and its principals. Delegating record keeping to staff or third party providers does not remove that responsibility.

Partners and directors should ensure:

• Clear retention policies are in place

• Staff understand what must be kept and for how long

• Systems support compliance automatically

• Records are not deleted prematurely

This oversight is a core governance duty.

Common mistakes law firms make with record retention

Over the years I see the same issues arise repeatedly. Most are not malicious but they still create risk.

Common mistakes include:

• Deleting records when a matter closes

• Assuming bank statements alone are sufficient

• Losing access to old accounting systems

• Inconsistent retention across departments

• Failing to document reconciliations properly

These weaknesses often come to light during inspections rather than at convenient times.

Practical tips for managing record retention

Good record retention does not need to be complicated. It does need to be deliberate.

Practical steps include:

• Creating a written record retention policy

• Aligning accounting software retention settings

• Scheduling regular internal reviews

• Avoiding automatic deletion rules

• Keeping a central record of closed matters

These measures reduce reliance on memory and individual judgement.

What happens if records are missing

If a firm cannot produce client account records when requested the regulator will usually ask why. Even if no loss is identified the absence of records is treated seriously.

Possible consequences include:

• Regulatory investigation

• Conditions placed on the firm

• Fines or reprimands

• Increased scrutiny in future

In extreme cases missing records have contributed to intervention decisions.

Correcting historic retention issues

If a firm realises that its record retention practices have been weak the best approach is proactive correction.

This may involve:

• Reviewing what records still exist

• Reconstructing missing information where possible

• Updating policies and systems

• Taking professional advice

Demonstrating improvement and transparency can mitigate regulatory concern.

The accountant’s role in record retention

Accountants play an important role in helping firms manage client account records correctly. This goes beyond preparing reconciliations.

Accountants can help by:

• Designing compliant accounting systems

• Reviewing record completeness

• Advising on retention policies

• Supporting firms during inspections

This support helps firms move from reactive compliance to confident control.

Final thoughts

So how long must law firms keep client account records. The minimum answer is six years. The better answer is long enough to protect the firm and its clients.

Client account records are not just historical paperwork. They are proof of trust. Keeping them properly is one of the simplest and most effective ways a law firm can demonstrate professionalism and compliance.

From my experience firms that treat record retention as a strategic responsibility rather than an administrative burden sleep better at night. If you are unsure whether your firm’s current practices meet expectations now is the right time to review them. Once records are gone they cannot be recreated and that is a risk no firm needs to take.

You may also find our guidance on How often should solicitors reconcile their client account and What are the SRA accounting rules and how do they work useful when reviewing related SRA and accounting obligations. For a broader overview of solicitor accounting and compliance topics you can visit our solicitors accounts rules hub which brings all related guidance together.