Setting up a law firm in the UK is one of the most rewarding things a solicitor can do, but it is also one of the most complex. This guide draws on our experience helping over 23 SRA-regulated firms through the process, including sole practices, partnerships, limited companies and alternative business structures (ABS). Whether you are a week away from handing in your notice or still at the thinking stage, this is an in-depth guide to help you on your journey.
If you would like our team to handle any or all of this for you, visit our law firm setup service page.
Step 1: Make Sure You Actually Meet the Basic Criteria
Before anything else, you need to be honest with yourself about whether you are ready. The SRA and your insurers will both be scrutinising similar things, so it is good to get ahead of it now.
PQE and experience
You need a qualified solicitor with at least three years of post-qualification experience (PQE) involved in the business. That is the SRA’s minimum, but your professional indemnity insurer may want to see closer to five years, particularly if you are taking on higher-risk work. In practice, anything under five years PQE tends to attract higher premiums or more awkward questions at the insurance stage.
We have helped setup solicitors with 3-4 years of experience, but it depends on a case by case basis.
SRA record
Any sanctions, disciplinary hearings, rebukes or current investigations will need to be disclosed. A clean record will smooth the path to setting up. The SRA and insurers may check, and anything that surfaces unexpectedly is far harder to explain than something you have disclosed and addressed upfront.
Other business interests
If you are a director or shareholder in any other companies, including property businesses or family firms, you’ll want to consider explaining these and if they take any time or commitment from you. The SRA wants to understand how you will split your time, and whether any external commitments could create a conflict of interest or risk to clients. If your involvement in another company is passive (for example, a family property business where your relatives do the day-to-day running), make that clear. A sentence or two in the business plan explaining the arrangement is usually enough.
Previous company directorships, even if you left years ago, may also come up in checks. It is always better to preempt a question than to receive one.
An example we have seen in the past: ‘I was a shareholder in a business my granddad set up, but I left years ago.’ We recommended a brief written explanation of that history for the business plan. The SRA’s concern is not that you have been in business before, it is that they understand the full picture.
Step 2: Decide on Your Business Structure
You need to decide on your legal structure before you can fill in the SRA’s authorisation forms, because the forms themselves ask you to confirm which type of firm you are applying to become.
The three types of SRA-authorised firm
- Recognised Sole Practice: a single solicitor practising on their own
- Recognised Body: a traditional firm where all principals and owners are legally qualified
- Licensed Body (ABS): a firm where at least some ownership or management sits with a non-lawyer
The distinction between a Recognised Body and a Licensed Body (ABS) is becoming less significant in practice. Many firms that would have historically applied as traditional partnerships are now opting for ABS status, even if there is only a small amount of non-lawyer involvement, because it gives far more flexibility for future investment, introducing a business partner, or bringing a family member into the ownership structure. ABS is no longer the exotic option it once was. Some firms are also converting to an ABS to bring in private equity or investors.
Which legal entity?
Within those SRA categories, you also need to decide how the business itself is structured:
- Limited company: the most common choice for new firms. Offers protection and more flexibility around ownership and future investment.
- Limited Liability Partnership (LLP): works well if there are at least two members and you want a partnership structure.
- Traditional partnership and other routes: less common now
If you are incorporating as a limited company, you need to do that before completing the SRA forms, because you will need the Companies House registration details for the paperwork.
Trading name versus registered company name
These do not have to be the same. Your registered company might be BT Law Limited, while you trade as a different brand name. If they differ, the SRA simply needs to know about the trading style or brand. This is a common and straightforward arrangement.
Step 3: Choose Your Firm Name
Your firm name is a marketing decision as much as a legal one, but there are some practical checks to run before you get attached to anything.
- Search Google for the name you are considering. If an established firm comes up with an identical or near-identical name, move on. If an old law firm or a foreign firm has the same name, consider if clients will be confused. You also do not want the firm to appear to be a ‘phoenix firm’ from an insurance application perspective.
- Check domain availability. Use a registrar such as GoDaddy to see if the .co.uk and .com versions are available. If you can get both, protect the .com and trade on the .co.uk. Keep the domain as short as possible.
- Check Companies House to make sure no existing company has the same name.
- Consider how the name reads to a client who is not a lawyer. Acronyms can work well but check what else those initials stand for in your sector or online.
We regularly see prospective firm owners suggest names that turn out to be existing law firms. A quick Google search before you fall in love with a name will save you the disappointment.
Step 4: Sort Your Professional Indemnity Insurance Early
The SRA will not even look at your application without a valid professional indemnity insurance (PII) quote. This is non-negotiable.
What you need to know about PII
- Insurance is regulated so you must go through a broker
- You’ll likely need some help with the associated business planning documents required to make an application
- All law firms must hold a minimum of £2 million cover (£3 million for incorporated bodies).
- Only insurers who have agreed to the SRA’s minimum terms can provide this cover.
- Premiums for new start-up firms are typically in the range of 4% to 10% of projected turnover, with lower-risk work at the lower end.
- A typical year-one premium for a individual doing private family, crime, immigration or commercial work might be around £5,000, though this varies depending on the turnover.
What insurers want to see
To get a quote, you will need to submit an insurance proposal form alongside a short business plan, financial projections for the first three years, and CVs for the key people involved in the business.
The three parts of your PII cost
- Annual premium: usually paid monthly by credit arrangement or upfront
- Excess: the amount you pay in the event of a claim
- Run-off cover: covers claims made after you close the firm, for work done while it was open. This is a significant cost to factor into any long-term planning in case you have to close the business.
Other insurance to consider
PII is the main event, but it is not the only insurance a new firm needs to consider. Cyber insurance is increasingly expected by insurers and the SRA and is relatively low cost. If you take on staff you will need employer’s liability insurance. Public liability insurance is worth considering if you see clients face to face. Critical illness and life cover are not mandatory but are sensible from a business continuity perspective.
We work closely with specialist brokers who can assist with PII quotes and all of the above.
Step 5: Plan Your Finances and Write Your Business Plan
A business plan is required for both the SRA authorisation process and your insurance application. But beyond being a compliance document, it is a genuinely useful exercise that forces you to confront questions you might otherwise gloss over.
What the business plan needs to cover
- Why you are setting up now, and what opportunity you see in the market
- Your practice areas and the types of clients you expect to serve
- Where your initial work will come from: referral networks, existing contacts, online marketing
- How your setup is being funded, and where that capital comes from
- Financial projections for years one, two, and three
- Your compliance arrangements, including who holds the COLP and COFA roles
- Business continuity and disaster recovery planning
- Where you will work from
The funding question
Insurers and the SRA are particularly interested in where your setup capital comes from. Personal savings are straightforward. Money from a family member that needs to be repaid is effectively a loan and should be described as such. The concern is not that you have borrowed money, it is that any external financial commitment should not create a risk of you breaching the SRA’s accounts rules under pressure.
Financial projections
Think about all the overhead you may have and check the practice is financially viable and makes a profit. Years two and three should show growth, even if conservatively modelled
The business plan narrative matters too. Brokers wants to understand the human story behind the application. Why are you setting up? What experience have you built that makes this the right move now? A clear, genuine answer to that question helps an underwriter or caseworker feel comfortable about your application.
Step 6: Appoint Your COLP and COFA
Every SRA-authorised firm must have a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA). In small firms this is likely to be the same person, although the SRA is considering stopping this so we’ll watch what happens there.
If you have not held these roles before, the SRA expects you to complete relevant training.
The COLP and COFA are responsible for the firm’s systems, controls, and compliance with the SRA’s rules. This includes anti-money laundering, risk management, supervision and training arrangements. You will also need to be familiar with the SRA Accounts Rules if you are holding client money, and we recommend a refresher course on those specifically if it has been a while.
You will also need a vulnerable client policy depending on your areas of practice and a suite of other policies usually included in an office manual. The SRA has been placing increasing emphasis on this area, particularly in practice areas such as family law, immigration, legal aid and private client work where clients may be going through difficult personal circumstances.
Step 7: Decide on Your Office and Practising Address
The SRA requires every firm to have a practising address, which will be published on the public register. This means that working from home involves putting your home address in the public domain, which many solicitors are not comfortable with, particularly in practice areas where emotions can run high.
Options for your practising address
- Serviced office: gives you a professional, lockable space and a reception. Ideal if you are seeing clients face to face regularly.
- Registered address service: a business centre or address provider gives you a postal address and Companies House registration address for a small monthly fee, without you needing a permanent desk there.
- Meeting rooms by the hour: providers such as Regis allow you to book meeting rooms as needed. You list this on your website as an appointment-only address, book a room when you have a client to see, and work from home the rest of the time. This is how most firms start.
- Home office: possible if you have considered how confidentiality will work.
Business continuity and home working
If you are working from home, your business plan and continuity arrangements need to address confidentiality, data security, and what happens if your equipment fails or your premises become unavailable. The SRA and your insurers want to know that client files and deadlines are not at risk if your laptop breaks or there is a flood.
Step 8: Decide on Your Client Account Arrangements
A common misconception is that all law firms must hold a client account. That has not been the case since the SRA updated its rules. You now have the option to operate without one, provided you structure your billing and payment arrangements accordingly.
Operating without a client account
If you bill on fixed fees and require payment in advance or on a stage-payment basis, you can in theory avoid holding client money altogether. This can reduce the compliance burden
In practice, this model only works well for some types of work.
Operating with a client account
Most firms, particularly those doing property, litigation, or legal aid work, operate with both office and client accounts. This gives you more flexibility on billing and disbursements but comes with greater compliance obligations under the SRA Accounts Rules and a higher annual SRA fee contribution.
Step 9: Complete Your SRA Authorisation Application
Once your business plan, insurance quote, and compliance arrangements are in order, you are ready to submit. The forms you will need depend on your structure:
- FA1: the main entity application for all new firms
- FA2: required for certain individuals, including non-lawyer owners and managers in an ABS, or anyone who needs individual SRA approval
- FA3: needed if another entity (such as a corporate director or shareholder) is involved
- FA8: required for any firm conducting financial services work, which includes more firms than many people realise
- FA10: required if the firm will conduct work covered by Anti-Money Laundering Regulations
We always submit a covering letter alongside the forms. This addresses anything that might prompt a query, pre-empts questions about the application, and presents the application clearly to the SRA caseworker reviewing it. This alone has a significant impact on processing time.
How long does authorisation take?
The SRA quotes a range, but in our experience, well-prepared applications are often turned around in three to four from submission. We have had authorisations granted in as little as three weeks for applications where everything was in order. The more complete and clearly presented your submission, the faster the response
We helped a solicitor setting up a private criminal defence and civil litigation firm. From submitting the application to receiving authorisation took three weeks. In another case, a personal injury and consumer law firm received authorisation in six weeks.
You can find the latest guidance from the SRA here, but please note that the forms are only part of the picture. Various questions will be asked around the structure of the intended setup.
Step 10: Plan Your IT, Systems, and Launch
While the SRA process is underway, there is plenty you can be doing in parallel to make sure you are ready to trade the moment authorisation comes through.
Case management system
Most new sole practices use either Clio or Leap. Both are cloud-based and include the basics you need for file management and billing. Your choice will often come down to personal preference and your practice area, so it is worth taking a demo.
Office manual and policies
You will need an office manual that is proportionate to the size of your firm. A 200-page magic circle manual is not appropriate for a one-person practice. It should cover how your firm manages risk, supervision, compliance, AML checks, complaints handling, and data protection. A template tailored to a small practice is a sensible starting point.
Your website and marketing
Your website needs to be compliant with the SRA’s transparency rules before you start taking clients. This includes clear pricing information for certain service types, your complaints procedure and regulatory details. Beyond compliance, your website is also your primary source of new enquiries. A well-built, SEO-optimised website in a specialist practice area can generate a consistent flow of leads.
Want us to handle this for you?
Our team has set up over 23 SRA-regulated law firms across England and Wales, covering sole practices, limited companies, partnerships and ABS structures. We have also helped international law firms outside of the UK open London branch offices. We help individuals or group of lawyers and non-lawyers wherever you are based.
We manage the entire process from business plan through to authorisation, typically getting clients through in three to four months from submission.
For more information, visit our law firm setup service where you’ll find testimonials and reviews from law firms owners.
For a free initial discussion, call us on 0330 133 8783 or email info@marketinglawyers.co.uk.
Written by Ben Trott, Managing Director, Marketing Lawyers
Frequently Asked Questions
How much does it cost to set up a law firm?
The main upfront costs are your SRA application fee (around £200 for a non ABS and £2,000 for an ABS), your professional indemnity insurance premium (4%-10% of year one turnover) and any company incorporation, support or legal costs. You should also budget for three to six months of personal living costs while the firm gets established, alongside the cost of your case management system, website, and any office space. Most of this can be arrangement on a monthly payment basis. Living costs will depend on the time it takes to bill clients and start your cash flow.
Do I need a client account?
No, not necessarily. The SRA rules changed and it is now possible to operate without holding client money, provided you structure your billing arrangements accordingly. Many firms in fixed-fee practice areas operate this way. However, it is not suitable for all types of work, particularly where disbursements are significant or unpredictable.
How long does the SRA application take?
A well-prepared, complete application typically takes three to four monthly from submission. The SRA’s own timescales vary, but in our experience the biggest determinant of speed is the quality of the submission. Incomplete applications or those that prompt follow-up queries can take significantly longer.
ABS applications can take six to twelve months if they are complex.
Can I set up a law firm from home?
Yes, though there are important considerations around your practising address, confidentiality and data security. Your home address will appear on the SRA’s public register unless you arrange a separate registered address. You will also need to demonstrate that you can maintain client confidentiality and data security from your home environment.
What is an ABS and do I need one?
An Alternative Business Structure (ABS) is a type of SRA-authorised firm that allows non-lawyers to own or manage the firm. You do not need to choose ABS status unless you want non-lawyer involvement in ownership or management, but many new firms are choosing this and are bringing in non-lawyer owners.
What is a COLP and COFA?
The Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFA) are roles required in every SRA-authorised firm. They are responsible for ensuring the firm meets its regulatory obligations. In a small firm, both roles usually sit with the same person. Training is available from providers online.
