Business Bank Accounts for Solicitors

Getting your law firm’s banking setup right

Choosing the right bank accounts is central to running a compliant and efficient legal practice in the UK. If your firm holds client money, you must keep it separate from your own funds using a dedicated client account alongside your office account. That separation protects clients, supports accurate bookkeeping and aligns with the rules set for firms in England and Wales. While Scotland and Northern Ireland have similar frameworks, requirements differ, so always check your regulator’s latest guidance.

There is also a live Government consultation that could change how interest from lawyers’ client accounts is treated in England and Wales. Any shift in interest flows or reporting would affect product choice, cash management and how you communicate with clients. This guide explains what each account is for, how to open them, what to compare across providers and practical steps to stay compliant without overpaying.

Good banking hygiene is as important as good file management - it reduces risk, reassures clients and saves time at audit.

Who this guidance will help

This is for UK solicitors and legal service providers who handle client money or plan to do so, including sole practitioners, small regional firms and growing practices. It is equally useful for practice managers reviewing banking arrangements or setting up a compliant multi-bank structure to balance cost, convenience and controls.

What counts as the right accounts

Law firms typically operate at least two accounts. The office account is your business current account - it handles fees, wages, rent and day-to-day expenses. The client account is a dedicated account for money you hold on behalf of clients, such as conveyancing proceeds, retainers and settlement funds. Keeping these monies separate is not optional if you are authorised to hold client money.

Major UK banks offer specialist client accounts for regulated professionals. Some products are explicitly designed for solicitors, with pooled client accounts and options for designated sub-accounts. Providers vary on interest rates, minimum balances and how interest is allocated. Client deposits held with UK-regulated banks are generally protected by the Financial Services Compensation Scheme, subject to eligibility and per-bank limits. Your choice of product should support reconciliations, audits and clear client communications.

How to set up and manage accounts well

Start by confirming your regulatory permissions to hold client money. When applying for a client account, expect standard identity checks, information about partners or directors, your AML procedures and evidence of professional regulation. Banks may ask about your clients and typical transactions. Some digital-first providers do not yet offer client-money accounts, even if they provide excellent business current accounts, so check availability before applying.

For the office account, compare fees, payment tools, card issuing and integrations with your accounting software. The Current Account Switch Service can move your business current account in seven working days, protecting payments during the switch. Client accounts may not be covered by CASS in the same way, so switching those can require a more manual plan. Build internal controls that ensure client funds are banked promptly, reconciled frequently and interest is handled fairly and transparently.

Keep your bank mandates, user access and reconciliation schedule documented - it speeds up audits and reduces error risk.

Why your choices matter now

Your banking choice shapes compliance, client trust and profitability. Robust systems reduce the chance of breaches and disciplinary action. Clients expect clear explanations about how their money is safeguarded and how interest is treated. With the Government consulting on diverting a portion of interest from lawyers’ client accounts, firms should anticipate possible changes to how interest is generated, retained or remitted. That could affect client care letters, terms of business and internal reporting.

Operationally, you may find the best approach is a hybrid setup - a digital bank for the office account to gain low fees, fast onboarding and modern tools, and a traditional or specialist bank for the client account to meet regulatory needs. Pricing and service vary significantly, so review them annually. Consistent, well-communicated banking processes will support smoother audits and stronger client confidence.

Pros and cons at a glance

Issues to keep on your radar

Monitor the progress of the proposed interest scheme for lawyers’ client accounts in England and Wales. If implemented, you may need an additional administrator account at the same bank to remit the relevant portion of interest, plus new reporting to demonstrate compliance. Ensure your provider can support that functionality and provide data extracts that align with your practice management system. Review FSCS eligibility and limits in the context of pooled client accounts and consider diversification where appropriate. Finally, confirm that your internal AML controls, source-of-funds checks and payment approvals align with bank requirements, as gaps can slow onboarding or trigger account reviews at inconvenient times.

Practical alternatives to consider

1. Use a digital bank for the office account and a traditional bank for the client account.
2. Maintain client funds across multiple banks to manage FSCS limits and operational resilience.
3. Use designated client sub-accounts where offered to simplify interest allocation.
4. Opt for notice or fixed-term client deposits for large, longer-dated balances if permitted.
5. If you do not hold client money, operate an office account only and clearly state that in client care documents.

Frequently asked questions

Q: Do all solicitors need a client account? A: Only firms that hold client money need a client account. If you never hold client funds, you may operate without one, but this must be reflected in your engagement terms.

Q: Is client money covered by FSCS? A: Client deposits with UK banks are generally covered, subject to eligibility and per-bank limits. Structures for pooled accounts must meet FSCS rules. Check with your provider and regulator.

Q: Can I use a digital bank for everything? A: Often not. Many digital providers offer great business current accounts but do not yet provide client-money accounts. A hybrid approach is common and compliant.

Q: How will the interest consultation affect my firm? A: If introduced, a portion of interest from lawyers’ client accounts may be remitted to the Government, with added reporting. Plan for changes to systems, letters and pricing.

Q: Can I switch accounts easily? A: The Current Account Switch Service covers many business current accounts and moves payments within seven working days. Specialist client accounts may require a more manual switch.

How Switcha fits into your plan

Switcha will connect you with the best options for what you are looking for, from digital office accounts to specialist client-money solutions. We help you compare eligibility, fees, interest handling and integrations, so you can make a clear, confident decision that supports compliance and day-to-day efficiency.

Next step: shortlist two providers for your office account and two for your client account, then request onboarding checklists and sample statements for comparison.

Important note

This guide provides general information for UK readers and is not legal, regulatory or financial advice. Always check the latest rules for your jurisdiction and speak to your regulator, bank and professional advisers before making decisions.