New law firm and ABS applications
Our team has an excellent understanding of what the SRA is looking for in an application. We work with our clients to identify common risk areas for their business and how these will be mitigated in the application, using our knowledge and experience to speed up the process. This saves our clients valuable time and allows them to focus on getting the business up and running.
What is the process to set up a new law firm?
Step 1: Get the structure right
One of the first things we do with our clients, whether it be a ‘traditional’ solicitor’s firm or an alternative business structure (‘ABS’), is to work out which regulatory structure best suits the proposed business model. Your consultant will guide you on the best structure to achieve your goals, including input on practising address considerations, commercial arrangements, and who will hold the key compliance roles (such as COLP, COFA and ‘qualified to supervise’).
Step 2: Get a solicitors professional indemnity insurance quote
The SRA would not accept a new law firm or ABS application unless you provide a valid professional indemnity insurance quotation which meets its ‘minimum terms’ of cover. We will work with you to prepare the required paperwork for the insurance application and connect you with brokers who can guide you on this crucial step.
Step 3: Draft the SRA Application paperwork
Your consultant will work with you to collate the information needed to prepare the SRA application forms. These typically include the ‘FA1’ form, which is the primary application for authorisation of the law firm entity, an ‘FA2’ form for each individual manager, owner, or compliance officer who does not meet the summary approval criteria, and an ‘FA3’ form for approval of any entity managers or owners of the law firm. Your consultant will advise you on which application forms would be required for your business and organisation structure.
Step 4: Submit SRA application and prepare for launch
We have a 100% success rate for new law firm applications which have been submitted to the SRA, so following the submission of the application we work with clients to prepare them to begin trading as a law firm. Our clients have access to our e-learning training modules on topics such as the COLP and COFA roles, the SRA’s Code of Conduct and Accounts Rules, anti-money laundering (‘AML’), and more. We will also prepare a suite of bespoke compliance documents, including office manual procedures, and AML and sanctions policies and risk assessments. For new law firms, this can really help clients both with the application process as well as ensuring there will be appropriate risk and compliance systems in place.
Step 5:
SRA Authorisation!
Post SRA Authorisation
We find that many clients which are launching a new law firm need some help in the early days. We have cost-effective ongoing retainers to support new firms with setting the groundwork for their risk and compliance procedures, as well as ensuring their client engagement paperwork, terms of business, and website meet the SRA’s requirements. Please contact us to learn more about how we can help your business as it begins trading as a law firm.
Other SRA Authorisation Services
In addition to new law firm applications, we can also help clients with a broad range of SRA authorisation matters, such as:
Applications to convert existing firms to an ABS structure
SRA authorisation as an ABS must be received before appointing any non-lawyer managers or owners to a ‘traditional’ law firm. We can provide guidance on how best to structure your business to achieve ABS authorisation, prepare all application paperwork, and liaise with the SRA on any queries arising during its review of the application.
Authorisation health check reviews
We can complete a review of your current management and ownership, compliance officers, and money laundering structures to ensure all approvals are in place and assist with any required applications.
Freelance solicitors
The SRA’s current Standards and Regulations allow solicitors to operate on a ‘freelance’ basis or in a business which is outside of the SRA’s regulation. We can provide guidance on eligibility requirements for these models, assist with the required SRA notifications, and prepare risk and compliance procedures which are tailored for solicitors practising outside of a traditional law firm model.
Appointment of new law firm managers, owners, and COLPs and COFAs
Our team has extensive experience of working with existing firms to seek regulatory approval of new managers, compliance officers (including Temporary Emergency Approval applications), and external investors. We have worked with many firms on the approval of private equity ownership structures, in particular.
We also regularly work with law firms which require SRA approval to implement an employee ownership model via an Employee Ownership Trust, and we have an excellent understanding of the SRA’s approach to the approval requirements for these structures.
Firm closures
All firms which intend to cease trading, including in circumstances of merger or acquisition, must apply to the SRA within specific timeframes to revoke their authorisation. We can help with the notifications to submit to the SRA and provide guidance on how to comply with its requirements for an orderly closure of the business.
We also regularly work with law firms which require SRA approval to implement an employee ownership model via an Employee Ownership Trust, and we have an excellent understanding of the SRA’s approach to the approval requirements for these structures.
Why work with us?
Unrivalled SRA authorisation expertise & a proven track record
All of our new law firm and alternative business structure (ABS) SRA applications are overseen by a team of former SRA Authorisation staff. They have many years of experience in SRA authorisation having worked both inside and outside of the regulator. Get in touch for an informal and confidential chat.
%
Success rate for SRA Applications
Speed up the SRA authorisation process and save on your time
How do we manage to achieve quicker results?
Having worked with and trained SRA staff we have a good understanding of what they are looking for in an application. We tackle the issues up front in our applications and set out how any potential concerns are being addressed. As experts in this area, our consultants have existing knowledge, templates and strategies to make swift progress. This saves our clients hours of time allowing them to focus on getting the business up and running.
SRA Application Service frequently asked questions:
Am I eligible to be authorised by the SRA as a law firm / alternative business structure (ABS)?
In order to be eligible for SRA authorisation as a solicitor’s firm or alternative business structure (ABS) you will need:
- at least one Director / Partner who is a qualified lawyer such as a solicitor, barrister or Chartered Legal Executive;
- at least one lawyer (and it could be the same individual) who is ‘qualified to supervise’ the legal work in the firm. That does not necessarily have to be the owners / directors / partners of the business, but all law firms need someone with 3 years experience as a qualified lawyer (though they do not necessarily need to be an employee);
- a practising address in England & Wales. From 25 November 2019 non-ABS law firms will also be eligible if they have a practising address within the UK;
- to have been formed within Europe (if a company).
For those wishing to set up as an alternative business structure (ABS), on day one of your proposed launch date you will also need at least some form of non-lawyer ownership or directorship, even if this is a separate limited company set up to hold one share.
As part of the SRA authorisation process you will also need to satisfy the SRA that:
- you have managed to secure a professional indemnity insurance quotation which meets the SRA’s minimum terms for law firm / ABS cover;
- you have a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA) in place to facilitate and monitor SRA compliance in the firm. The COLP must be a lawyer. The COFA does not need any particular qualification.
- you have systems and policies and procedures in place to comply with the detail of the SRA’s regulatory requirements for law firms;
- the Directors (or members in an LLP or partners if a partnership), COLP, COFA and owners are all ‘fit and proper’ and suitable to hold these roles.
In our first meeting with you our consultant will check that you are eligible and guide you on your structure. We will connect you with an insurance broker as soon as possible because a quotation for professional indemnity insurance must be attached to your SRA application. Your consultant will prepare a comprehensive suite of risk and compliance procedures for you tailored to SRA standards and prepare the necessary SRA authorisation forms for you.
Am I eligible to be authorised by the SRA as a law firm / alternative business structure (ABS)?
In order to be eligible for SRA authorisation as a solicitor’s firm or alternative business structure (ABS) you will need:
- at least one Director / Partner who is a qualified lawyer such as a solicitor, barrister or Chartered Legal Executive;
- at least one lawyer (and it could be the same individual) who is ‘qualified to supervise’ the legal work in the firm. That does not necessarily have to be the owners / directors / partners of the business, but all law firms need someone with 3 years experience as a qualified lawyer (though they do not necessarily need to be an employee);
- a practising address in England & Wales. From 25 November 2019 non-ABS law firms will also be eligible if they have a practising address within the UK;
- to have been formed within Europe (if a company).
For those wishing to set up as an alternative business structure (ABS), on day one of your proposed launch date you will also need at least some form of non-lawyer ownership or directorship, even if this is a separate limited company set up to hold one share.
As part of the SRA authorisation process you will also need to satisfy the SRA that:
- you have managed to secure a professional indemnity insurance quotation which meets the SRA’s minimum terms for law firm / ABS cover;
- you have a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA) in place to facilitate and monitor SRA compliance in the firm. The COLP must be a lawyer. The COFA does not need any particular qualification.
- you have systems and policies and procedures in place to comply with the detail of the SRA’s regulatory requirements for law firms;
- the Directors (or members in an LLP or partners if a partnership), COLP, COFA and owners are all ‘fit and proper’ and suitable to hold these roles.
In our first meeting with you our consultant will check that you are eligible and guide you on your structure. We will connect you with an insurance broker as soon as possible because a quotation for professional indemnity insurance must be attached to your SRA application. Your consultant will prepare a comprehensive suite of risk and compliance procedures for you tailored to SRA standards and prepare the necessary SRA authorisation forms for you.
What is a COLP and a COFA?
Can an alternative business structure (ABS) be 100% owned by non-lawyers?
Yes, absolutely. As long as you have a lawyer at Director level (or member for an LLP, partner for a partnership) you will be eligible for SRA authorisation as an alternative business structure (ABS).
Do I actually need to become a law firm to offer legal services?
The SRA is relaxing its rules on who needs to become authorised as a solicitor’s firm or alternative business structure (ABS) from 25 November 2019. Freelance lawyers can provide some services as a sole trader and in-house lawyers can provide certain services to the public. Nonetheless you will most likely still need to become a law firm if you want to set up a business providing legal services and do any of the following:
- describe the business as a law firm, solicitor’s firm or similar or use the word ‘solicitors’ in the business name;
- offer certain restricted legal services such as litigation, advocacy, conveyancing, probate, administration of oaths, immigration advice or exempt financial services provide reserved legal activities;
- hold client money as a solicitor or a solicitor’s firm.
‘Freelance solicitors’ with 3 years experience can provide some of the restricted activities listed above and hold a very limited category of client money but they are unable to employ anyone or incorporate.
Owing to these limitations, setting up a law firm is still the go-to for most. However, if you think you might be able to benefit from the new ways of working feel free to drop us a line and we would be more than happy to guide you further.
Will the SRA want to see a business plan?
The SRA no longer request sight of a business plan for all SRA authorisation applications. However, in order to secure a professional indemnity insurance quote for your law firm you will need to supply the professional indemnity insurers with a business plan. Get in touch if you would like a business plan template.
How much does it cost to set up a solicitor’s firm or an alternative business structure (ABS)?
Like any other business, the cost of setting up a law firm can vary greatly. However most firms will need to consider the following common costs (in order of expense!):
- typical business expenses: office space (if you choose to make use of an office that is), staff costs, website set up, IT hardware, IT support, company secretarial services, accountancy services, stationary etc;
- professional indemnity insurance (PII) – Law Society research suggests that once up and running the average law firm spends about 5% of its turnover on PII cover. We typically see premiums lower than this in year one but nonetheless the insurance premium tends to be one of the biggest costs in becoming a law firm;
- SRA authorisation fees – the SRA charges new law firms a fee for regulation for the coming year (at the time of writing between circa £400 and £2,600 depending upon when in the year you apply and if you hold client money). ABSs also have to pay an application fee which varies depending upon how many new people need to be approved by the SRA. Your consultant can guide you further once we know a bit more about your business;
- Individual solicitor practising certificate fees, if recruiting a number of solicitors and choose to pay for those (it is fairly typical to do so).
Our fees depend upon how complicated the application is likely to be. We offer monthly plans as well as fixed fees payable in stages. Get in touch and we can provide you with a definite figure.
Will the SRA want to see an office manual of compliance procedures?
The SRA no longer require this in every case. However, typically the SRA will expect to receive some reassurance that such procedures are being prepared and may well ask for sight of certain documentation depending upon what concerns if any they have upon reviewing the application. Our consultant will prepare these on your behalf as part of our SRA authorisation service.
Do I need a professional indemnity insurance quote before submitting my application for authorisation to the SRA?
Yes. Whether a traditional solicitor’s firm or an alternative business structure, you will need at least £2 million (£3 million for companies / LLPs) of professional indemnity cover. The SRA do not consider an application for authorisation complete unless it is accompanied by a quote from one of their accredited insurers. Most firms can secure cover at a viable rate but we encourage our clients to secure a quote early on because occasionally this can be significant obstacle. Your consultant will connect you with an insurance broker best suited to assist. In order to secure a quotation you will need to complete an insurance proposal form and also provide:
- a short business plan – our consultant will provide you with a template to get started and assist with the sections on risk and compliance;
- financial projections for at least year one (preferably to year three). The idea is to set out anticipated income and outgoings month by month in year one at least;
- CVs for key people in the solicitor’s firm / ABS (the solicitors especially).
It normally takes 7 – 14 days to receive the insurance quotation and your consultant will use that time to draft and agree with you the SRA application. We do have some examples of the key documents for the insurers and also broker contacts we are happy to share, just get in touch.
What does the SRA mean when it uses the term ‘manager’ or 'principal'?
This simply refers to the partners in a law firm partnership (equity and salaried), the members of an LLP and the directors of a company.
How do I get started?
Simply email us your contact details or give us a call on 01789 868444. We would be delighted to arrange a discussion on the best model and approach for your business.
Get a quote for SRA authorisation
Call 01789 868444