The number of law firms closing due to SRA Accounts Rules breaches has increased by 35 per cent, new figures reveal.
The Solicitors Regulation Authority (SRA), which published the report, said it had closed 50 law firms in the year to 31 October 2017 compared to 37 the previous year.
It attributed the rise to a particular problem in firms failing to follow the rules in relation to solicitor accounts and indemnity insurance.
In total, the SRA said it received 35,000 ethics queries in 2016/17, with the top five concerns including confidentiality and disclosure, the accounts rules, validity of practising certificates, retainers with clients and conflict in interest.
The figures follow a recent intervention in which a law firm was fined 35,000 and ordered to shut down after failing to comply with the profession’s stringent accounting rules.
According to the Solicitors Disciplinary Tribunal (SDT), the law firm failed to keep “properly written up” records of dealings with client money for a period of almost six years.
The aim of the SRA Accounts Rules is to keep client money safe, which can be achieved by effectively separating the law firm’s finances from client money.
Paul Philip, SRA Chief Executive, said: “Law firms are not regulated to operate their client accounts as a banking facility for clients. They should not trade on their reputation to provide banking facilities, which can result in significant risks for the firm, as well as their clients and the wider public.
“Our rules are not intended to prevent usual practice in traditional work undertaken by solicitors such as conveyancing, company acquisitions, the administration of estates or dealing with formal trusts. Money passing through the client account can be entirely legitimate where there is a clear legal service being provided, but we will continue to take action against those who cannot justify their actions, put their clients at risk and undermine public trust in the profession.”
With Mark Sharpley, executive committee member of the UK200 Legal Group, and fellow partners Jeremy Allison and Nicki Shipley at the helm of an experienced team of legal finance specialists, the Smailes Goldie Group is well positioned to offer tax and accounting advice to solicitors.
Whether you are a sole practitioner or a multi-partner firm, the Smailes Goldie group has the expertise and understanding of all financial matters relating to the legal profession, including: compliance services, Solicitors’ Accounts Rule audits, preparing annual accounts, tax advice for both firms and/or partners, and advising on LLP status.
For more information on any of the issues covered in this bulletin, please contact Mark Sharpley at firstname.lastname@example.org.