Intro & who this is for

Lenders demand security to reduce risk. For solicitors’ loans that security commonly takes the form of debentures (combining fixed and floating charges), personal guarantees from owners/partners, legal charges over property, and assignments of non‑client receivables. Solicitor practices are unusual because SRA client money rules prevent lenders from taking security over client funds, and professional indemnity (PII) and regulatory obligations create extra complexity.

This guide is for directors, partners and practice managers of limited companies and LLP law firms (not sole traders) seeking facilities from around £10,000 upwards. You’ll learn what lenders typically require, how SRA rules affect security, enforcement risks, negotiation tactics and alternative options. We act as an introducer — not a lender — and can match you to lenders and brokers experienced in law‑firm finance. Want a quick, no‑obligation quote? Free Eligibility Check.

Why lenders ask for security — what concerns they have about solicitor practices

Lenders focus on the ability of a borrower to repay. With law firms, lenders worry about:

• Client money exposure and restrictions on accessing trust account receipts.
• Contingent liabilities from negligence claims or regulatory sanctions.
• Concentration risk where a few fee‑earners or large matters drive revenue.
• Variable cashflow tied to case completions and settlement timing.
• Operational risks if partners leave or PII limits are breached.

Security mitigates these risks and can increase facility size or improve pricing. Typical lender due diligence will include historic and forecasted accounts, cashflow, PII cover, SRA compliance checks and confirmation of trust account segregation.

Common types of security explained

Debenture (fixed and floating charge)

A debenture is a document creating security over a company’s assets. It often combines:

• Fixed charge — security over specific assets (freehold, machinery, named bank account), giving the lender strong control over those assets.
• Floating charge — security over circulating or changing assets (stock, receivables, work in progress) which “floats” until the lender crystallises the security on default.

Why lenders use debentures: they provide broad coverage and priority in insolvency proceedings (subject to existing registered charges and preferential creditors). Enforcement commonly allows appointment of a receiver or administrator and crystallisation of floating charges.

Personal guarantees (PGs)

Most lenders ask partners, members or directors to provide personal guarantees. Key points:

• Guarantees can be unlimited or capped (amount or term).
• Lenders may require spouses to sign or request directors’ guarantees in small owner‑managed firms.
• Guarantors can negotiate sunset clauses, limitations on enforcement or carve‑outs for household necessities.

Implication: PGs expose personal assets to lender claims if the practice defaults — so negotiating caps, time‑limits or step‑down provisions is common.

Legal charge over property / mortgage on premises

If the practice owns commercial premises, a legal charge (registered at HM Land Registry) gives the lender clear priority over that asset. This is straightforward to enforce compared with intangible assets and is often preferred for larger facilities or bridging loans.

Assignment of book debts / receivables

Lenders may ask for assignment of invoices or future fees. Assignments can be:

• Specific assignment — security over particular invoices or matters.
• General assignment — wider coverage of receivables (often via floating charge).

Important: assignments cannot usually include client trust receipts. Invoice finance for solicitors is typically limited to non‑client invoices and must respect SRA rules.

Charges over bank accounts & cashflow control

Lenders may require control or a charge over practice bank accounts (non‑client accounts). For security they may ask for blocked accounts, receipts control or account charges — but trust accounts holding client money are excluded. Practical workarounds include routing non‑client receipts into a designated lender‑controlled account.

Security over assets: vehicles, equipment, fixtures, goodwill

Tangible assets (computers, vehicles, furniture) are simple for lenders to take security over. Goodwill or client lists are less tangible and harder to value — lenders typically accept them as secondary security only.

Other protections

Intercreditor agreements, security trustees and escrow arrangements are common in multi‑party financings or when a broker/lender panel is involved. These structures clarify enforcement rights and priority between lenders.

Client money and SRA considerations — crucial rules lenders and practices must respect

The Solicitors Regulation Authority (SRA) requires strict segregation and handling of client funds. Consequences for lenders and practices:

• Lenders generally cannot take security over SRA client money or trust accounts.
• Practices must keep client and non‑client funds separate; lenders focus on non‑client income streams and company assets.
• When considering invoice finance or receivables lending, expect exclusions for any fee or receipt that falls within the definition of client money in the SRA Accounts Rules.

For authoritative guidance see the SRA client money rules: SRA: client money. Lenders will confirm with your bank and auditors that trust funds are ring‑fenced.

If you want lenders and brokers who understand these constraints, start with a Free Eligibility Check so we can match your practice appropriately.

How enforcement works — practical steps and risks for a solicitor practice

On default, lenders typically:

1. Issue notices and seek repayment.
2. Enforce fixed charges (seize or sell charged assets) or appoint receivers against charged property.
3. Crystallise floating charges (convert them into fixed charges) and appoint an administrator or administrative receiver where permitted.

For solicitor firms enforcement can trigger additional professional issues: SRA notification, client file transfers, and potential PII claims. Early engagement with the lender and specialist legal advice often reduces disruption and preserves client continuity.

Negotiating and limiting security — practical tips

Consider these negotiation points to reduce personal exposure and operational disruption:

• Ask for capped or time‑limited PGs; seek sunset clauses after a period or when debt reduces below a threshold.
• Exclude client money, staff wages, pensions and tax liabilities from security covenants.
• Negotiate step‑down security (e.g., reduced security once a loan-to-value target is hit).
• Insist on a matter carve‑out so lenders cannot interfere with client work or handover processes except in extreme circumstances.
• Use a security trustee in multi‑lender deals to simplify administration and enforcement mechanics.

Use specialist commercial solicitors and a finance broker experienced with law firms to achieve better terms.

Alternatives and complementary finance options for solicitors

If full security packages are unattractive, explore alternatives:

• Invoice finance limited to non‑client invoices.
• Asset finance for equipment or vehicles (asset remains secured to lender, practice retains use).
• Unsecured business loans (available with strong trading history but often smaller or higher cost).
• Bridging loans secured on property rather than on the trading company.

Specialist lenders and brokers familiar with law practices can often structure facilities that respect SRA rules while meeting working capital needs.

How UK Business Loans helps

UK Business Loans matches solicitor practices to lenders and brokers who understand SRA constraints and the specific risks of law firms. Our service is free and designed to deliver quick, no‑obligation quotes from providers who can offer appropriate security structures or limited‑recourse options.

Complete a short enquiry — it’s not an application, and it won’t affect credit files — and we’ll connect you to partners who can provide tailored quotes. Get Quote Now.

For a broader overview of lenders and finance options in the legal sector, see our solicitors industry page on solicitors business loans: solicitors business loans.

We are an introducer, not a lender or regulated financial adviser. We share your enquiry with selected lenders/brokers to obtain quotes.

FAQ

Will a lender take my client account as security?

No. Lenders generally cannot take security over SRA client money. They will exclude trust accounts and focus on non‑client income, company assets and personal guarantees.

Do I have to give a personal guarantee?

Many lenders request PGs from partners or directors, especially for smaller practices or where asset coverage is limited. Guarantees can often be negotiated (capped, time‑limited or with sunset clauses).

What is a debenture and how does it affect my firm?

A debenture creates security over a company’s assets (fixed and floating). It gives lenders priority over secured assets and can lead to appointment of receivers or administrators on default.

Can I cap a personal guarantee?

Yes. Guarantors commonly negotiate caps (a fixed liability ceiling), sunset dates or step‑down mechanisms tied to repayment. Lenders may accept limitations in return for slightly higher pricing.

What happens to SRA duties if a lender enforces?

Enforcement can pose risks to client continuity. Regulators expect proper handover and protection of client files and funds. Early legal advice and clear enforcement protocols in loan documents help manage this risk.

Are there lenders who specialise in law firms?

Yes — some lenders and brokers specialise in professional practices and structure facilities that honour SRA rules. We can match you to those specialists via a Free Eligibility Check.

Will getting a loan affect my professional indemnity insurance?

Not directly, but lenders will check PII limits and claims history during due diligence. Any material increase in risk may impact insurer terms; always notify your insurer of material changes if required by your policy.

How quickly can I get a quote?

After you submit brief details we typically pass enquiries to relevant partners — many respond within hours, though complex facilities can take longer.

Get started — free eligibility check and quick quote

Ready to explore options? Complete our short enquiry and we’ll match you with specialist lenders and brokers who understand solicitor practice finance. Get Quote Now. Your enquiry is shared only with selected partners and will not affect your credit file.

UK Business Loans is an introducer. We do not lend money or provide regulated financial advice. By submitting an enquiry you consent to us sharing your details with relevant lenders/brokers.