How solicitors ensure finance stays compliant with the SRA Accounts Rules

Summary: Solicitors must keep firm borrowing and any case-specific funding strictly separate from client money, document the purpose of funds, maintain clear ledgers and supporting evidence, run timely reconciliations and independent reviews, and get written undertakings from lenders where client monies or client transactions are involved. This page explains the SRA‑critical rules, the common finance types used by law firms and their SRA risks, a practical compliance checklist you can use immediately, how to work with lenders and brokers safely, systems that reduce risk, short real-world vignettes, top questions to ask before signing loan documents, and how UK Business Loans can help you find lender or broker partners while you remain responsible for regulatory compliance.

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Quick summary: key SRA considerations when taking finance

• Keep client money and firm (office) money strictly separate — never place client money in an office or lender account.
• Record the purpose of any borrowing in writing (firm working capital, practice expansion, case-specific bridging) and ensure it’s clearly not client money unless specifically authorised.
• Set up bank accounts with correct naming conventions and controls; obtain lender confirmations where funds touch client accounts.
• Perform regular reconciliations, maintain an audit trail and retain statements, contracts, and correspondence for SRA inspection.
• Use regulated brokers/lenders where appropriate and ask for written undertakings to protect client funds and clarify how repayments will be handled.

Understanding the SRA Accounts Rules: short overview and why it matters to finance

The SRA Accounts Rules are designed to protect client money and ensure firms act with probity. Key concepts for finance are:

Client money vs office money (rule highlights)

• Client money = funds held for or on behalf of clients (e.g., completion funds, client settlements, fees held on account) — strict segregation and handling rules apply.
• Office (firm) money = funds belonging to the firm (fee income after it has been properly transferred/cleared to the office ledger).
• Never mix: placing client money into an office account (or vice versa) is a common trigger for SRA investigations.

Accounting records, reconciliations and audits

SRA requires accurate ledgers, bank reconciliations, and retention of records. For any loan or facility: record entries promptly, reconcile client accounts frequently and keep evidence (bank statements, lender instructions, emails, signed authorisations).

Transfers and withdrawals (what is permitted)

Only use client money for permitted purposes and with client consent where required. When a lender’s funds are used to complete a matter (for example, bridging funds for a conveyancing completion), ensure instructions are documented and that the lender does not treat those funds as client money.

Common finance types solicitors use — and SRA compliance implications

Below are typical finance options and the main compliance points for each.

Business loans (firm borrowing) — secured/unsecured

Firm-level loans for expansion, IT, premises. These should be documented as office funds and not flow through client accounts. If security is taken over practice assets, update records and notify any mortgagee where necessary.

Bridging finance and case-specific funding

Often used in conveyancing or to complete transactions pending client funds. High SRA risk: if proceeds touch client accounts, you must get written undertakings and ensure the lender will not treat the funds as client money.

Invoice finance and overdrafts

Invoice discounting or factoring may involve assignment of receivables. Watch for clauses that assign client-related invoices — these can affect client money treatment and require client notification/consent if funds relate to client matters.

Asset & vehicle finance

Usually low SRA risk if proceeds go to the firm and you maintain separation from client ledgers. Check documentation for retention of title and how disposals impact client work (e.g., use of financed vehicle to collect client files).

Practical compliance checklist when arranging finance (actionable)

Use this checklist every time your firm or a partner considers finance. Keep a signed copy with the matter file and your central compliance records.

• 1. Agree purpose in writing — Record whether funds are for firm use or case-specific. Sample ledger note: “Loan received 01/10/2025 — Purpose: firm working capital. Not client money.”
• 2. Bank account setup & naming — All firm loans must be paid into a clearly named office account (e.g., “Office Account — [Firm Name]”). Never accept lender instruction to pay into client accounts.
• 3. Ledger entries & client monies tracking — Post immediately to the correct ledger. If any funds relate to a client matter, create an audit record showing reason, client consent and any undertakings.
• 4. Interest handling — For client money held in client accounts, follow SRA rules on interest allocation. For firm loans, ensure interest charges do not get offset against client money.
• 5. Reconciliations & independent review — Reconcile client ledgers and bank accounts at least monthly (more often for conveyancing). Obtain an independent accountant review annually and keep evidence of the review.
• 6. AML and CDD for lenders & fund flows — Conduct due diligence on the lender/broker, check their identity; record KYC steps and ensure AML controls for inbound/outbound payments.
• 7. Documentation & audit trail — Retain loan agreements, bank statements, emails, client consents, and any lender undertakings. Keep them accessible for SRA inspections.
• 8. Lender undertakings where relevant — Ask for a written undertaking that lender funds will not be treated as client money and that the lender will not seek repayment from client funds without express instruction.

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How to work safely with lenders and brokers (contracts, promotions and FCA points)

Using regulated brokers vs direct lenders

Check the status and reputation of brokers and lenders. Ask for references and evidence of experience with law firms. Even if a broker is not FCA-regulated, document their credentials and check creditworthiness and client reviews.

Financial promotions — fairness, clarity and disclosures

Any finance offer you consider should be clear and not misleading. Keep copies of financial promotions and ensure your firm’s compliance officer reviews any material before relying on it.

Asking lenders for written undertakings

Where lender funds impact client transactions (for example, bridging funds for a conveyance), obtain a written undertaking clarifying:

• That the lender will not treat sums as client money;
• How repayments will be made and from which account;
• Confirmation that lender will accept no claim over the client account without express written consent from the firm/client.

Practical systems & tools that help compliance

Practice accounting systems and software features

Use practice accounting packages that offer:

• Distinct client ledgers and office ledgers
• Automated bank reconciliation and audit logs
• Tagged transactions and exportable reconciliation reports

Regular external reviews & internal policies

Document an internal policy for finance, schedule monthly reconciliations and at least an annual external account review. Keep staff training records on SRA Accounts Rules and the firm’s finance protocol.

Case examples (vignettes)

Example 1 — Bridging loan for conveyancing completion
A conveyancer needs bridging funds to complete a purchase the same day. The firm obtains a lender undertaking that funds are not client money and will be repaid from cleared completion funds. The firm records the lender undertaking on the matter file, posts the receipt to the matter ledger, and performs a same‑day reconciliation when completion funds arrive. Result: client money stayed segregated and the SRA record trail is clear.

Example 2 — Practice expansion loan
A firm takes a secured loan for office refurbishment. Loan proceeds are directed to a named office account. The firm records the loan in the firm’s loan ledger and posts repayments to the office account. Annual accountant review confirms correct treatment. Result: no impact on client ledgers and clear audit trail.

Top tips: what to ask before signing loan documents

• Will loan proceeds ever be required to pass through a client account?
• Can the lender provide a written undertaking that funds will not be treated as client money?
• How will repayments be collected and from which account?
• Does any clause assign client invoices or client funds to the lender?
• Can the lender accept liability in writing if they request access to client monies in error?

Why use UK Business Loans for solicitors seeking compliant finance

UK Business Loans connects law firms and practice managers with lenders and brokers experienced in working with legal practices. We do not provide loans or legal advice — we introduce you to providers who understand practice needs and SRA sensitivities. Complete a short, no-obligation enquiry and we’ll match you with suitable partners quickly.

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We don’t give legal advice or lend money. We match you to lenders/brokers who can help — you remain responsible for compliance with the SRA Accounts Rules.

For example, if you’d like lenders who specialise in solicitor matters (bridging for conveyancing, practice loans), tell us about the case and we’ll connect you to partners who understand how to preserve client money protections and provide written undertakings where needed. If you want to read more on industry-focused finance options for legal firms, see our solicitors business loans page: solicitors business loans.

FAQs about solicitor finance & SRA compliance

Will arranging a loan trigger an SRA report?

Not automatically. But any mistake involving client money (mis-posting, mixing accounts) may require reporting and could lead to investigation. Proper documentation and reconciliations prevent this.

Where should loan proceeds be paid?

To a properly named office (firm) bank account unless the loan is specifically for a client‑related transaction and you have documented client consent and lender undertakings.

Does UK Business Loans provide legal or regulated financial advice?

No. UK Business Loans is an introducer. We connect firms to lenders and brokers; any legal or regulated advice must be sought from qualified advisers or the lender/broker directly.

Will submitting a Quick Enquiry affect credit scores?

No — completing our enquiry form to get matched does not affect credit scores. Lenders perform credit checks only if you proceed to a formal application.

Next steps — free eligibility check with UK Business Loans

Ready to explore compliant finance options for your firm? Complete our short enquiry and we’ll connect you with lenders/brokers experienced with law firms. It takes under 2 minutes and there’s no obligation.

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Disclosure: UK Business Loans is an introducer. We are not a lender and do not provide regulated legal or financial advice. We connect businesses to lenders and brokers — you remain responsible for legal and regulatory compliance, including the SRA Accounts Rules. Example scenarios are illustrative only; all finance is subject to lender terms, credit checks and eligibility.

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1) Can solicitors obtain business loans in the UK without breaching the SRA Accounts Rules?
Yes — provided loan proceeds are kept in a clearly named office account, the purpose of funds is documented, client money is never mixed, and reconciliations and records are maintained in line with SRA Accounts Rules.

2) Where should loan proceeds for a law firm be paid to stay SRA-compliant?
Loan funds should be paid into a properly named office (firm) account — never a client account — unless a documented client‑specific arrangement and written lender undertaking apply.

3) Will submitting a Quick Enquiry with UK Business Loans affect my credit score?
No — completing UK Business Loans’ enquiry is a soft, no‑obligation match request and only formal lender applications may trigger credit checks.

4) Do I need a written undertaking from the lender when bridging or case‑specific funds touch a client matter?
Yes — you should obtain a written undertaking that the lender will not treat sums as client money and will not draw on client accounts without express consent.

5) Which types of finance are commonly used by solicitors and what are their SRA risks?
Common options include business loans (low risk if kept in office accounts), bridging finance (high risk if routed via client accounts), invoice finance (risk of invoice assignment), and asset finance (generally low risk), each requiring appropriate controls and documentation.

6) How do I choose a lender or broker experienced in solicitor finance?
Select FCA‑regulated or reputable brokers with proven law‑firm experience, check references, verify sector expertise, and document your due diligence and AML checks.

7) How often should client ledgers and bank reconciliations be performed when using practice finance?
Reconciliations should be performed at least monthly and more frequently for conveyancing or where finance affects client transactions, with independent reviews annually.

8) Can invoice finance affect client money and what should solicitors watch for?
Yes — invoice discounting or factoring may assign receivables and potentially involve client funds, so check contracts for assignment clauses and obtain client consent where relevant.

9) What documents should a firm retain to evidence SRA compliance when arranging loans?
Keep loan agreements, lender undertakings, bank statements, named account details, ledger entries, client consents, reconciliation reports and correspondence as part of the matter and central compliance files.

10) Does UK Business Loans provide legal or regulated financial advice to solicitors seeking loans?
No — UK Business Loans acts as an introducer that matches firms with lenders and brokers; solicitors remain responsible for legal and regulatory compliance and must seek professional advice if needed.