How to start a law firm in England and Wales

First, decide whether you need a firm at all

Since November 2019 there have been three realistic ways for a solicitor to work independently, and only one of them involves authorising a firm.

• An SRA-authorised firm (a recognised sole practice, a recognised body, or a licensed body). You can do any legal work your team is competent to do, hold client money and employ people. You also carry the full regulatory load.
• A freelance solicitor practising in your own name. No firm authorisation is needed, but you can’t hold client money, can’t employ anyone if you do reserved work, and need to have practised for three years before you can offer reserved legal services.
• A consultant working through an existing platform firm, which holds the authorisation and client account in exchange for a share of your fees.

If you want to do transactional property work, where completion money passes through a client account, the firm route is usually the only practical one. If your work is advisory, freelance or consultancy can get you started faster and cheaper.

Choose a structure

The SRA authorises three kinds of firm:

• Recognised sole practice: you, practising alone as the firm. Unlimited personal liability; minimum indemnity cover of £2 million per claim.
• Recognised body: a partnership, company or LLP owned and managed by lawyers. A limited company or LLP needs minimum cover of £3 million per claim.
• Licensed body (an ABS): a firm with non-lawyer owners or managers, licensed under the Legal Services Act 2007. More scrutiny and a higher application fee.

Most solicitors setting up alone choose a sole practice or a single-director limited company. The company limits personal liability for business debts but raises the indemnity minimum, which affects your premium.

Meet the three-year experience rule

An authorised firm must have at least one manager or employee who is a lawyer, has practised as such for a minimum of three years, and supervises the firm’s work (SRA Authorisation of Firms Rules, rule 9). If you qualified more recently, you can still set up, but you need to bring in someone who meets the requirement.

The old “qualified to supervise” rule, with its 12 hours of management training, was removed in 2019. It is still widely quoted; it no longer applies.

Arrange professional indemnity insurance

Your application must include an in-date quote or certificate from a participating insurer, on the SRA’s minimum terms, naming the firm exactly as it appears on the application. Minimum cover is £2 million per claim for sole practitioners and partnerships, and £3 million for companies and LLPs.

Three things catch new firms out:

• Your work mix drives the premium. Conveyancing is priced as higher risk than advisory work.
• Run-off cover. If you close the firm, you must buy six years of run-off cover. Budget for it from the start.
• Cyber cover is separate. Minimum-terms insurance isn’t a cyber policy, and many lenders and insurers now expect you to have one.

Use a broker who places solicitors’ cover. They will want your business plan, so write that first.

Appoint your compliance officers

Every authorised firm needs a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA), both approved by the SRA. In a sole practice you will usually hold both roles, which the rules currently allow.

The SRA has consulted on requiring separate COLPs and COFAs in larger firms (turnover above £600,000 or client account balances of £500,000 or more), with sole owner-manager firms exempt. Check the current position before you apply.

If you will do conveyancing or other work in scope of the Money Laundering Regulations 2017, you also need a nominated officer (MLRO), a firm-wide risk assessment, and written policies, controls and procedures.

Write the business plan and policies

The SRA asks how the firm will be funded, where its work will come from, what it will do, and how it will manage risk and comply with its obligations. A short, credible plan with realistic figures is better than a long one. It also does double duty for your insurer and your bank.

Have these written before you apply:

• Client care and terms of business, including how you price and bill
• A complaints procedure that signposts the Legal Ombudsman
• Conflicts, confidentiality and supervision policies
• Anti-money laundering policies and the firm-wide risk assessment, if in scope
• Data protection and information security

If you will offer services covered by the SRA Transparency Rules, residential conveyancing and uncontested probate among them, you must publish prices and service details on your website. Your website must also show the SRA’s digital badge.

Apply to the SRA

Applications are made through mySRA. For a new recognised sole practice or recognised body you pay £200 on submission, plus a regulatory fee pro-rated to when you are authorised in the practising year, currently between £200 and £800. A licensed body pays £2,000 plus £150 for each person who needs SRA approval.

The SRA aims to decide within 90 days, but the clock only starts once the application is complete, and it can take up to 180 days. An incomplete application is the most common cause of delay, so check every document before you submit and answer questions quickly.

For a full breakdown of what setting up costs, including the fees above, see how much it costs to start a law firm.

Decide how you will handle client money

If you hold client money, the SRA Accounts Rules 2019 apply in full:

• A client account at a bank or building society, kept separate from office money
• Reconciliations at least every five weeks, between the bank, the cash book and client ledgers
• An annual accountant’s report, unless your average client account balance is £10,000 or less and your maximum balance is £250,000 or less in the period
• A firm contribution to the SRA Compensation Fund, £2,170 for 2026/27

Some new firms avoid holding client money altogether by using a third-party managed account (TPMA), where a regulated payment provider holds the funds. It removes most of the accounts burden but doesn’t suit every kind of work, and lenders’ requirements on conveyancing transactions vary.

Complete the other registrations

• ICO: the data protection fee, £52 a year for most new firms (£47 by direct debit)
• HMRC: register for VAT once your taxable turnover passes £90,000, or earlier by choice
• Companies House: if you are incorporating
• Property work: HM Land Registry portal access and HMRC’s online SDLT filing. Lender panel membership if you will act for mortgage lenders; many lenders are cautious about new and sole-principal firms, so check their criteria early.

Set up your systems

A small firm needs case management, legal accounting that meets the Accounts Rules, document storage, identity and AML checks, e-signatures and time recording. Buying them separately is how small firms end up re-keying the same client details into five places.

Cyber Essentials certification is cheap, quick and increasingly expected by insurers and lenders. Do it before launch.

Find your first clients

Most new firms start from relationships: former clients, estate agents, accountants and other solicitors who refer work they don’t do. Before you contact anyone, read your current employment contract. Restrictive covenants, and your duty to your employer while you still work there, may limit who you can approach and when. Never take precedents or client data with you.

Introducers can help fill the gap. Under paragraph 5.1 of the SRA Code of Conduct, any fee you pay for an introduction must be agreed in writing and disclosed to the client. Referral fees are banned outright for personal injury claims and for clients in criminal proceedings.