As a law firm operating in the UK, your practice must meet certain requirements set out by the Solicitors Regulation Authority (SRA).
These regulations are designed to protect client assets and the integrity of your firm while ensuring the SRA holds up to date information about your practice.
Compliance with these regulations, aside from being compulsory, demonstrates to clients that your firm is financially stable, well-managed and prioritises their security.
In order to stay compliant and avoid the risk that comes with regulatory breaches, it is important that you consult with a specialist in law firm accounts, as the unique complexity and tight regulations mean that errors can easily occur.
Accounting regulations
The SRA Accounts Rules, governing the management of client money, are put in place to protect clients and must, without exception, be adhered to.
These rules require that client funds are kept separate from the firm’s money, with the need for regular reconciliations and accurate record-keeping.
The potential for financial mismanagement or errors is significant without rigorous controls and systems in place – but we can help you to set up and maintain these systems.
The need for transparency
The SRA also imposes Transparency Rules that require law firms to provide clear, accessible, and upfront information about the costs of their services. This includes detailing the basis for charges, likely disbursements, and the average cost or range of costs for services.
For firms that do not specialise in regulatory compliance, navigating these requirements can be challenging. Engaging a specialist can help you develop pricing models that meet the SRA’s expectations and implement practices that improve the clarity and accessibility of your cost information.
This not only supports regulatory compliance but also builds client trust.
Anti-money laundering regulations
Compliance with anti-money laundering (AML) regulations is another critical area of responsibility for law firms, where specialist advice provides significant value.
You must have robust systems and controls in place to detect, prevent, and report instances of money laundering.
There is substantial risk to you and your clients if you fail meet these obligations, not least as your firm (provided it falls under the scope of the Act) could be liable for prosecution under the Economic Crime and Corporate Transparency Act 2023.
Top tips for SRA-compliant record keeping
The potential for financial mismanagement or errors is significant – but rigorous controls and systems can minimise risk.
There are a range of effective strategies for ensuring compliance with SRA regulations and avoiding errors.
Setting clear policies and procedures for all financial processes is crucial for ensuring all staff are aware of their responsibilities and expectations. Ensure all staff receive regular training and implement review protocols to minimise the risk of errors.
Utilise appropriate accounting software to automate routine processes, provide clear audit trails, and enable bank reconciliation.
Make sure you conduct regular internal reviews to ensure consistency in record keeping and nip any issues in the bud.
Take a proactive approach to fixing mistakes. Ensure any errors are investigated immediately and corrected as soon as possible. Document all procedures and review them to help prevent problems from recurring.
Specialist support with SRA rules
SRA rules are put in place to protect your firm and your clients’ activities.
However, they can present challenges for firms, particularly in the areas of financial reporting, record-keeping and fiscal transparency.
As specialist accountants for legal firms, we can support you in implementing the right policies and procedures to ensure that your firm meets its statutory requirements.
Together, we’ll help you keep your clients’ money safe.
Contact our expert team today for support with SRA rules around financial reporting and management.
