Financial management—law firms


Produced in partnership with DG Legal
Practice notes

Financial management—law firms


Produced in partnership with DG Legal

Practice notes
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This Practice Note provides guidance on managing financial risk. It reflects the SRA Standards and Regulations 2019 and additional financial management Requirements that apply to Lexcel accredited firms. It also provides guidance on common financial risk tools.

The duty to monitor Financial stability and business viability

You must:

  1. •

    actively monitor your financial stability and business viability—once you are aware that you will cease to operate, you effect the orderly wind-down of your activities

  2. •

    identify, monitor and manage all material risks to your business, including those which may arise from your connected practices

The SRA does not provide guidance about how you should achieve this.

In practice, the amount of resource expended on managing financial risk will vary from firm to firm and will depend on many factors such as the size of the firm and the degree to which it is presently financially stable. For instance, a firm that is heavily dependent on bank borrowings may invest significant resources to implement financial risk systems that are monitored at regular intervals. Other firms may be content to spend

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Requirements definition
What does Requirements mean?

A DCO should include “Requirements” to which the development authorised by the DCO is to be subject. Similar to planning conditions, a requirement specifies the matters for which detailed approval needs to be obtained before the development can be lawfully begin.

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