What does an accountant for solicitors actually do?

At Towerstone Accountants we provide specialist accountancy services for solicitors and law firms operating under SRA regulation. This article has been written to explain What does an accountant for solicitors actually do 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.

I am often asked this question by solicitors who already have an accountant but are not entirely sure what they should expect from them. On paper, the role can look similar to any other accountant. There are accounts to prepare, tax returns to file, and deadlines to meet. In practice, the role of an accountant for solicitors is far broader, far more specialised, and far more important than many firms realise.

Solicitor firms sit in a unique position. They are commercial businesses, but they are also regulated professionals entrusted with client money and subject to strict ethical and financial rules. That combination changes the accountant’s role completely. A general business accountant focuses mainly on profit and tax. An accountant for solicitors must focus on compliance, risk, systems, and long term stability as well as the numbers.

In this article, I will explain in detail what an accountant for solicitors actually does, how the role differs from general practice accounting, and why choosing the right adviser matters so much. This is based on real world experience working with solicitor firms of all sizes, from sole practitioners to multi partner practices.

Understanding the solicitor firm environment

Before looking at the accountant’s role, it is important to understand the environment solicitors operate in.

A solicitor firm typically deals with:

• Client money that does not belong to the firm

• Matters that run over long periods

• Work in progress that may or may not convert to fees

• Strict regulatory oversight

• High professional risk

The firm must comply with the rules set by the Solicitors Regulation Authority, while also remaining commercially viable.

An accountant for solicitors works within this framework. Their job is not just to record what has happened, but to help ensure the firm operates safely, compliantly, and sustainably.

Keeping client money and office money separate

One of the most fundamental responsibilities is ensuring that client money and office money are treated correctly.

In a solicitor firm:

• Client money must be held in a separate client account

• Client funds are not income

• Transfers can only be made when properly due

• Detailed records must be maintained for each client

An accountant for solicitors helps design, review, and monitor systems that support this separation. They ensure that:

• Bookkeeping systems reflect the distinction clearly

• Client balances are accurate at all times

• Reconciliations are carried out properly

• Errors are identified early

This is an area where general accountants often struggle, simply because they have never had to deal with money that does not belong to the business.

Supporting compliance with the SRA Accounts Rules

The SRA Accounts Rules are central to legal accounting.

They govern how client money is received, held, transferred, recorded, and reported. Breaches of these rules can trigger regulatory action, even if no client has suffered a loss.

An accountant for solicitors helps by:

• Explaining the rules in practical terms

• Embedding compliance into day to day processes

• Reviewing procedures and controls

• Identifying potential breaches

• Advising on whether issues need to be reported

This advisory role is ongoing, not a once a year exercise.

Preparing and reviewing bookkeeping systems

Accurate bookkeeping is essential in any business, but in a law firm it has additional layers of importance.

An accountant for solicitors will often:

• Advise on suitable accounting software

• Ensure the system can handle client and office accounts properly

• Set up correct nominal codes

• Review postings for compliance issues

• Train staff on best practice

The goal is not just tidy records, but records that would stand up to regulatory scrutiny.

Regular reconciliations and oversight

Reconciliations are a key compliance requirement for solicitor firms.

This typically includes:

• Bank reconciliations

• Client account reconciliations

• Comparison of client ledgers to bank balances

An accountant for solicitors ensures these reconciliations are:

• Done regularly

• Done correctly

• Reviewed and documented

They also help interpret the results, flagging unusual items or trends that may indicate deeper issues.

Preparing statutory accounts

Like any other business, solicitor firms need annual accounts.

However, legal accounts often require a deeper understanding of the firm’s operations, particularly around work in progress, debtors, and client balances.

An accountant for solicitors will:

• Prepare accounts in line with UK accounting standards

• Ensure income is recognised appropriately

• Review recoverability of work in progress

• Present accounts clearly for partners or directors

These accounts are not just for compliance. They are a key management tool.

Corporation Tax and other tax obligations

Tax remains a core part of the accountant’s role, but it must be handled with an understanding of the legal sector.

Depending on the firm’s structure, this may involve:

• Corporation Tax for limited companies

• Income Tax for partners or LLP members

• VAT advice and compliance

• PAYE and National Insurance

An accountant for solicitors ensures that:

• Client money is not treated as taxable income

• Timing of income recognition is correct

• Tax liabilities are forecast in advance

• Payments are made on time

They will also liaise with HM Revenue & Customs where necessary.

Advising on firm structure and profit extraction

Many solicitors seek advice on whether to operate as a partnership, LLP, or limited company.

An accountant for solicitors helps evaluate:

• Tax efficiency

• Regulatory implications

• Profit extraction methods

• Succession planning

They also advise on:

• Directors’ salaries

• Dividends

• Partner drawings

• Retained profits

This advice must balance tax efficiency with cash flow and regulatory safety.

Cash flow management and forecasting

In my experience, cash flow is one of the biggest pressure points in solicitor firms.

Factors such as delayed billing, slow paying clients, and high fixed costs can create strain even in profitable practices.

An accountant for solicitors helps by:

• Preparing cash flow forecasts

• Identifying periods of risk

• Advising on drawings policies

• Supporting working capital management

They also help firms understand the impact of lock up, meaning work in progress and debtors, on cash availability.

Budgeting and financial planning

Beyond day to day cash flow, accountants play a key role in longer term planning.

This includes:

• Annual budgets

• Updated forecasts

• Scenario planning

• Sensitivity analysis

An accountant for solicitors helps partners answer questions such as:

• Can we afford to hire

• What happens if income falls

• How much can we safely draw

• Is expansion viable

These conversations are about strategy, not just numbers.

Supporting the COFA and governance

Every solicitor firm must appoint a Compliance Officer for Finance and Administration.

The COFA is responsible for overseeing financial compliance and reporting breaches where required.

An accountant for solicitors works closely with the COFA by:

• Providing accurate financial information

• Highlighting potential issues

• Supporting breach assessments

• Advising on controls and procedures

This relationship is critical to good governance.

Accountants’ reports and regulatory interaction

Some solicitor firms are required to obtain an accountants’ report under SRA rules.

An accountant for solicitors may:

• Prepare the report if qualified to do so

• Support the reporting accountant

• Address issues raised

• Implement recommended improvements

They may also assist during SRA inspections or information requests, helping firms respond clearly and accurately.

Risk management and early warning signs

A good accountant for solicitors acts as an early warning system.

By reviewing financial data regularly, they can spot:

• Deteriorating cash flow

• Rising lock up

• Unusual transactions

• Patterns that suggest compliance risk

Raising these issues early allows firms to act before problems escalate.

Liaising with other advisers

Solicitor firms often have multiple advisers, including:

• Banks

• Insurers

• Practice consultants

• Legal advisers

An accountant for solicitors often acts as a central point, coordinating financial information and ensuring consistency across advice.

Explaining the numbers in plain English

One of the most valuable aspects of the role is communication.

An accountant for solicitors should be able to:

• Explain financial results clearly

• Translate regulations into practical steps

• Answer questions without jargon

• Support informed decision making

This is especially important where partners have different levels of financial confidence.

Common misconceptions about the role

I often see firms assume that their accountant’s job is limited to year end accounts and tax returns.

In reality, that is only a small part of the picture.

Another misconception is that any qualified accountant can do this work. While qualification is essential, experience with solicitors is equally important.

What happens when the role is done badly

When firms rely on accountants without legal sector experience, problems tend to arise.

Common issues include:

• Client money misclassification

• Inadequate reconciliations

• Late identification of breaches

• Cash flow surprises

• Regulatory stress

These issues are rarely caused by bad intent. They are caused by lack of specialist knowledge.

What a good accountant for solicitors adds

When the role is done well, the benefits are clear.

A good accountant for solicitors provides:

• Regulatory confidence

• Financial clarity

• Better decision making

• Reduced stress for partners

• A more resilient firm

They act as a trusted adviser rather than a reactive service provider.

My professional perspective

In my view, an accountant for solicitors is part technician, part adviser, and part risk manager.

They sit at the intersection of finance, regulation, and strategy. Their work underpins the firm’s ability to operate safely and profitably.

Choosing the right accountant is not about finding the cheapest option. It is about finding someone who understands the realities of legal practice and can support it properly.

Final thoughts

So what does an accountant for solicitors actually do?

They do far more than prepare accounts and file tax returns. They help protect client money, support regulatory compliance, manage cash flow, guide strategic decisions, and provide clarity in a complex environment.

For any solicitor involved in running a firm, understanding this role is essential. With the right accountant in place, financial management becomes a source of confidence rather than concern.

You may also find our guidance on How can a solicitor check if their accountant is SRA-approved and How does an accountant help with an SRA audit 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.