Introduction to Solicitor Accounts and SRA Accounts Rules

Introduction

Money is at the heart of almost every solicitor's transaction — a conveyancing completion, a probate distribution, a personal injury settlement. Where that money belongs to a **client** rather than to the firm, the law imposes some of the most demanding obligations in professional practice. This first chapter introduces **solicitors accounts**, explains the difference between **client money** and the firm's own **business money**, and sets out the **purpose, scope and regulatory framework** of the **SRA Accounts Rules** that govern how solicitors and firms in England and Wales handle money held for clients and third parties.

Assessment focus

Solicitors Accounts is examined within **SQE1 FLK2**. Candidates are required to apply the **core principles of double-entry bookkeeping** and the **SRA Accounts Rules** appropriately and effectively, **at the level of a competent newly qualified solicitor**, to realistic client-based and ethical problems. The functioning legal knowledge tested covers: transactions involving **client money** and **money belonging to the authorised body**; the operation of **ledgers and bank accounts**; the **payment of interest**; **breaches** of the rules; the **accounting entries** required; **bills**; the obtaining and delivery of **accountants' reports**; and **record-keeping** obligations. Questions are **single best answer questions (SBAQs)** set in realistic scenarios; this is a **closed-book** assessment, so the rules, definitions and accounting treatments must be recalled and applied from memory.

Study tips

1) Lock in the **two-money distinction** at the outset: **client money** belongs to (or is held for) the client or a third party; **business money** belongs to the firm. Almost every rule flows from keeping the two **separate**. 2) Learn the **current vocabulary** — the SRA Accounts Rules (in force from 25 November 2019) refer to the firm's own money as money of the **'authorised body'**, not 'office money'. 3) Remember the **regulator**: the **Solicitors Regulation Authority (SRA)** makes and enforces the Rules; the Rules sit alongside the **SRA Principles** and the **SRA Code of Conduct**. 4) Note the role of the **COFA** (Compliance Officer for Finance and Administration), who is responsible for the firm's compliance with the Accounts Rules. 5) Understand the **consequences** of breach — SRA disciplinary action, fines, referral to the Solicitors Disciplinary Tribunal, and in the most serious cases removal from the roll or revocation of authorisation.