Everything you need to know about starting a successful legal consultancy business while staying compliant with SRA regulations.
| Topic | Key Point |
|---|---|
| SRA Practice Certificate | Required when serving clients directly; exempt when working under a solicitor firm's umbrella |
| Public Practice Definition | Providing services to the public constitutes public practice requiring SRA approval |
| Umbrella Arrangement | Working for solicitor firms under their supervision is not public practice |
| Business Structure | Limited company often offers better tax efficiency than sole tradership |
| Insurance | Professional Indemnity Insurance is mandatory for regulated activities |
| Marketing | Cannot advertise to the public directly; can market services to other solicitor firms |
The legal profession is undergoing a significant transformation. Increasing numbers of qualified solicitors are choosing to leave traditional law firm employment to establish themselves as independent consultants. This shift offers greater flexibility, improved work-life balance, and often significantly higher earning potential.
However, the journey from employed solicitor to consultant is not without its complications. Understanding the Solicitors Regulation Authority (SRA) framework is absolutely essential before taking the plunge. The distinction between what constitutes "public practice" and working under an umbrella arrangement can mean the difference between a smooth transition and regulatory trouble.
This guide walks you through everything you need to organise before launching your consultancy practice, covering the regulatory requirements, business structures, tax implications, and practical steps to build a sustainable consultancy business serving the legal sector.
Direct Answer: If you provide legal services directly to clients or the general public, you are operating a public practice and will need an SRA practice certificate, professional indemnity insurance, and to be registered as an alternative business structure (ABS) in most cases.
The SRA defines public practice very specifically. According to the SRA Practice Framework Rules, providing reserved legal services to members of the public—such as conveyancing, probate, litigation, or will drafting—constitutes public practice and requires formal authorisation.
However, there's a crucial distinction that many consultants miss: providing services to other solicitors and legal practices does not constitute public practice under the current SRA framework. This means you can offer your expertise to law firms without needing your own practice certificate, as long as you work under their regulatory umbrella.
From my experience advising solicitors on regulatory compliance, I cannot stress enough how important it is to document the nature of your working relationships clearly. HMRC and the SRA both scrutinise arrangements where former employees become contractors. Ensure your contracts explicitly state you are providing services to the firm, not acting as their agent for client-facing work.
Direct Answer: Working under the umbrella of an existing solicitor firm means you provide legal consultancy services to that firm, which supervises and takes responsibility for client work. This arrangement does not require a personal SRA practice certificate.
The SRA has published specific guidance on this matter in their guidance for in-house and freelance solicitors. Under this framework, if you are engaged by a law firm to provide consultancy services and that firm retains full responsibility for the client relationship and regulatory compliance, you do not need to hold your own practice certificate.
Before signing any consultancy agreement, request a copy of the firm's SRA authorisation and check they have appropriate professional indemnity coverage for your involvement. Some firms will try to engage you without proper insurance in place—which creates liability exposure for both parties.
Direct Answer: Most consultant solicitors operate through a limited company (Ltd) because it offers significant tax advantages including lower corporation tax rates, the ability to extract profits via dividends, and reduced National Insurance Contributions compared to sole tradership.
| Consideration | Limited Company | Sole Trader |
|---|---|---|
| Corporation Tax | 25% (2024/25) on profits | N/A |
| Income Tax on Drawdown | Dividends taxed at 8.75%-39.35% | 20%-45% on all profits |
| National Insurance | Lower via dividend extraction | Class 2 & 4 contributions |
| Limited Liability | ||
| Admin Requirements | Companies House filings, accounts | Self Assessment only |
For the 2024/25 tax year, corporation tax stands at 25% for companies with profits over £250,000, with a small profits rate of 19% for companies with profits up to £50,000. Most consultancy businesses will fall between these thresholds and should plan their tax extraction strategy carefully with a qualified accountant.
Direct Answer: Professional Indemnity Insurance (PII) is mandatory for any solicitor providing legal services, regardless of whether you operate independently or under a firm's umbrella. When working for a law firm, their master policy may cover you—but you must verify this explicitly before commencing work.
The SRA requires all authorised bodies to maintain adequate and appropriate PII coverage. For consultant solicitors, this typically means minimum coverage of £2 million for any single claim, with many firms requiring £3 million or more depending on the nature of work undertaken.
Direct Answer: Under SRA advertising rules, you cannot advertise legal services directly to the public unless you hold appropriate authorisation. However, you can actively market your consultancy services to other solicitor firms and legal practices as a business-to-business service.
This distinction is crucial. The SRA's advertising rules are designed to protect consumers, which means you cannot market your services as a solicitor to members of the public. However, marketing to law firms as a specialist consultancy resource is entirely permissible.
Email and call law firms directly to introduce your consultancy services. Focus on your specialist expertise and how you can help them manage capacity.
LinkedIn is invaluable for connecting with law firm partners and practice managers. Share industry insights to build credibility.
Join solicitor networks and forums where firms look for freelance support. The Law Society and local law societies are good starting points.
Build relationships with other consultants who may refer work to you. Barristers, accountants, and legal recruiters often need solicitor support.
Never describe yourself as a "solicitor providing legal services" in any public-facing marketing if you don't hold a practice certificate. Instead, position yourself as a "legal consultant" or "legal industry specialist" providing services to law firms. The SRA has taken action against solicitors who misrepresent their status.
Expert Accountants Working with Consultant Solicitors for Over 10 Years
This guide was prepared by the Taxwise Accountancy team, who have been providing specialist accounting and business support services to consultant solicitors for over 10 years. We understand the unique challenges and opportunities facing legal professionals who choose the consultancy path. The information reflects current SRA regulations and HMRC guidance for the 2024/25 tax year.
External Resources:
SRA Practice Framework Rules | SRA Freelance Solicitor Guidance | GOV.UK Business Setup Guide