Solicitors Community news

Bank letters have traditionally been a staple of the work that reporting accountants (RAs) do as part of their work on confirming the balances that were held by clients in their bank accounts. In more recent times, however, their effectiveness and usefulness have been questioned and less reliance placed on them in this area of work. There are a number of reasons for this.

In recent years, the legal press has consistently highlighted concerns around the extent to which some law firms overly rely on client account interest to supplement operating income. While this approach may previously have provided a degree of financial flexibility, recent developments, particularly those proposed in the Ministry of Justice reforms, have increased scrutiny of its sustainability. Against a backdrop of wider economic and regulatory pressure, firms are being encouraged to take a more structured and forward-looking approach to financial resilience.

The Carson McDowell review (commissioned by the Legal Services Board) focused on the SRA's regulation of SSB Law, but in doing so it revealed significant underlying financial instability within the firm. What would the outcome have been for SSB Law and its clients if this financial instability had been identified and acted upon quicker.

This year’s annual conference was another informative and enjoyable day, and so I wanted to share a very brief summary of some of the key take aways for those who couldn’t make it.

The Solicitors Regulation Authority (SRA) used its recent COLP/COFA Conference in October to clarify its position following the consumer protection review earlier this year. While the SRA had previously signalled a potential overhaul of the client account model, the message is now clear: significant changes to the model of firms holding client money in favour of TPMAs are not imminent. Instead, the regulator’s immediate focus is on strengthening safeguards within the current system. A new consultation is expected soon to discuss what the SRA is proposing to change.

Back in October 2024, the Legal Services Board (LSB) published the results of the independent review, conducted by Carson McDowell LLP as commissioned by LSB, into the regulatory events leading up to the Solicitors Regulation Authority's (SRA) intervention into Axiom Ince Ltd. Fast forward twelve months and the LSB has now published the results of the independent review into the SRA’s regulation of the now collapsed SSB Group.

On 27 May 2025, the Legal Services Board (LSB) issued a number of ‘Directions’ to the SRA to improve various systems and controls shortcomings in the wake of the Axiom Ince review report.

In ICAEW’s recent webinar, Janet Taylor of Taylor Mowbray LLP and Andrew Baker of RSM UK discussed recent regulatory insights and took a deep dive into some of the practical issues of SRA Accounts governing residual balances and managing client money.

The results of the Law Society’s Leadership and Management Section (LMS) benchmarking survey have been released. For over twenty years, the survey has been providing detailed accounting and other financial data from law firms and, for the past fifteen years or so, it has been prepared by Hazlewoods: specialist accountants working with law firms in the legal sector.