Solicitors Accounts Rules: Key Rules and 2024 Changes

Solicitors Accounts Rules: What You Need to Know

Solicitors in England and Wales are subject to strict rules regarding how they handle money belonging to clients. These rules are outlined by the Solicitors Regulation Authority (SRA) and are designed to protect client funds, ensure transparency, and maintain public trust in the legal profession.

Understanding the Solicitors Accounts Rules is crucial for compliance, particularly for firms handling large amounts of client money such as in conveyancing, probate, or litigation work.

What Rules Govern Solicitors’ Accounts?

The SRA Accounts Rules 2019 (updated most recently in 2023–2024) govern how solicitors and legal practices must handle client money. These rules replaced the more complex 2011 version and aim to simplify requirements while maintaining core protections.

The rules focus on key principles:

• Solicitors must keep client money separate from the firm's own money.

• Funds must be used only for the client’s intended purpose.

• Client money must be recorded accurately and promptly.

• A clear audit trail must be maintained for all transactions.

The SRA Accounts Rules apply to client accounts, client ledger cards, and reconciliations, and they place personal responsibility on compliance officers (COLPs/COFAs) to ensure the firm follows the correct procedures.

What Is the 14-Day Rule?

The 14-day rule refers to the requirement under Rule 2.3 that client money must be paid into a client account within 14 calendar days of receipt. This rule is essential for safeguarding funds that are temporarily held on behalf of clients, such as deposits, settlements, or disbursements.

If money isn’t paid in on time, the solicitor must be able to explain why. Acceptable delays might include where the money is clearly intended as payment for an invoice and doesn’t count as client money—or where the funds never actually reach the solicitor (e.g. paid directly to counsel or court).

What Makes Accounting in Law Firms So Different?

Accounting in law firms is different because solicitors frequently handle client money, which is held on trust. This brings legal, ethical, and regulatory obligations beyond standard business finance.

Unlike typical trading businesses, law firms often manage:

• Third-party funds (e.g. settlements, compensation, property transactions)

• Escrow arrangements where funds are held pending outcomes

• Mixed funds which need to be separated carefully

• Client interest calculations, where interest may be payable on balances held

Every transaction must be traceable to the individual client, with complete accuracy. Mistakes can lead not only to regulatory action, but also to professional negligence claims, reputational damage, or in serious cases, criminal sanctions.

Additionally, legal firms are required to reconcile client accounts every five weeks and keep records for at least six years.

Have There Been Any Recent Changes to the Solicitors Accounts Rules?

Yes, there have been recent changes. The SRA made amendments in 2023 and 2024 to clarify expectations, modernise outdated provisions, and improve consistency.

Key updates include:

• Clearer guidance on when third-party managed accounts (TPMAs) can be used instead of traditional client accounts

• Confirmation that firms must have a written policy for dealing with residual client balances, including steps to return funds or transfer to charity where appropriate

• Reinforcement of rules around prompt payment of bills from client funds, including the requirement to deliver a bill before transferring money for costs

• Emphasis on ensuring that compliance officers understand and document processes for risk and controls over client money

The SRA has signalled a move toward a risk-based approach, putting more onus on firms to create and follow systems that are proportionate to the nature of their practice, rather than ticking boxes.

Conclusion

The Solicitors Accounts Rules exist to protect client money, maintain ethical standards, and support confidence in legal services. From the 14-day rule to regular reconciliations, strict record keeping, and changes in regulation, compliance is non-negotiable. Law firms must stay up to date, train their staff, and implement clear procedures to ensure they not only avoid breaches but maintain the trust their clients place in them.