Managing an SRA Forensic Investigation
Speaker: Dianne Brewer and Darren Whelan
June 13, 2025 | Last Updated on June 13, 2025
Who is this training for?
This on demand workshop is for Solicitors, Lawyers, Accountants, Compliance Officers, COFA’s, Legal Accounts Professionals, Legal Cashiers and anyone that has any involvement in working in legal finance and compliance.
Purpose of this training?
If you have received notice of an SRA Forensic Investigation, this is not a random exercise; the regulator has received information suggesting a serious or systemic issue at the firm.
This online workshop examines the factors that lead to the authorisation of a visit by the SRA, what to expect both before, during and after the investigation including guidance on how to manage and survive one.
- Introduction
- Monitoring and enforcement by the SRA – An overview
- The role of the firm’s COLP & COFA
Accountants Report
- The consequences of a qualified Accountant’s Report
- Minimising the chances of a visit by Forensic Investigations
SRA Accounts Rules
- Common compliance issues and pitfalls
Forensic Investigations
- What leads to a Forensic Investigation visit?
- Pre-inspection considerations
- What to expect during an investigation visit
- Post inspection process
Possible Disciplinary Outcomes
- Internal SRA sanctions
- Referral to the Solicitors Disciplinary Tribunal
Questions and Answers
#1. When dealing with residual balances, instead of recording the payment to the charity from the client’s ledger, your firm moves the residual balance to a ledger in the name of the charity. The payment is then recorded and made from that ledger every six months.
Is this a breach of the SRA Accounts Rules?
#2. True or false: the SRA Accounts Rules set out certain requirements for law firm financial statements, such as how client account should be treated on a balance sheet
#3. Your firm acted for a client in the sale of commercial premises which is now completed. Your firm are in the process of accounting to him for the net proceeds of sale. Independently of this retainer, the client’s daughter has instructed another solicitor in your firm to act for her in buying a flat.
The father has asked the firm to retain enough money to cover his daughter’s legal fees and to send the balance to him.
Is this providing banking facilities?
#4. Is it permissible to pass on the costs of conducting client due diligence as a disbursement under the AML under the money laundering regulations on to my client?
#5. You have paid a disbursement from the business account and now have sufficient money held in the client account towards it.
Are you required to send the client a bill or other written notification of costs prior to transferring the money from the client account to the business account?
#6. When dealing with residual balances that are £500 or less that are to be paid to a charity, your firm posts a journal from the business side of the client’s ledger and credits a nominal ledger in the name of the charity. You then transfer the residual balance from the client account to the business account.
Once a month, the payment to the charity is made from the charity nominal ledger. Is this permissible under the SRA Accounts Rules?
#7. Your firm is instructed by the landlord of a new development of commercial properties to prepare the lease agreements. You’re also instructed to receive, and hold in client account, the rental deposits that are paid by the tenants. These will be held until the lease comes to an end and any conditions, e.g. dilapidations, are met.
Is this a breach of the SRA Accounts Rules?
#8. Your firm prepare a lot of wills and fixed fee interviews as one-off transactions for clients. However, instead of opening an individual client ledger for each client, you have a general ledger on which you record the details of each client and the costs received.
Is this a breach of the SRA Accounts Rules?
#9. Your firm acted for a client in the sale of commercial premises. The transaction has been completed and the firm are in the process of accounting to the client for the net proceeds of sale. Independently of this retainer, the client’s son has instructed another solicitor in your firm to act for him in buying a flat.
The father has asked your firm to retain enough money to cover his son’s legal fees and to send the balance to him. Your firm is concerned that by transferring the money to the son you may be in breach of rule 3.3.
Is this providing banking facilities?
#10. You instruct a medical reporting agency to obtain copy-medico legal documents on behalf of a client that has been involved in a road traffic accident.
Is this cost a disbursement for VAT purposes or a recharge?
Further Information
Practice notes and training sessions represent the Association of Legal Compliance & Accounts’ view of good practice in a particular area. They are not intended to be the only standard of good practice that firms can follow.
Practice notes and training sessions are not legal advice, and do not necessarily provide a defence to complaints of misconduct or poor service. While we have taken care to ensure that they are accurate, up to date and useful, we will not accept any legal liability in relation to them.
Frequently Asked Questions
Why On Demand
It’s really simple:
- Reduced cost
- Can be watched anywhere, anytime on any device – no travel time or cost
- Shorter and more efficient than face-to-face
- Recorded and can be replayed at your leisure
Online – the Cons
On Demand is not for everyone one. People learn differently and watching a pre-recorded training video can feel very lonely and isolated. It requires strong, self-motivation and time management skills. There is no opportunity to ask a question and receive an answer straight away as you would with an online or a face-to-face workshop.
No. In order to watch them, you must watch them whilst logged into the website.
