Is running your own law firm still worth it? Six worked examples, and what the SRA's pause on the compliance officer rules changes

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Is running your own law firm still worth it? For a fair number of small firms the answer, on the numbers alone, is yes, and the SRA’s decision at the end of September to pause its new compliance officer rules has moved a couple of the examples below back towards staying put. For others, particularly conveyancing-led practices with high insurance costs, the numbers favour a consultant platform whether the rules come in or not. In this article I’ve modelled six illustrative firms both ways, with the rules as the Legal Services Board approved them and with no change at all, so you can see which assumptions actually decide the answer.

I should say at the start that I’m a consultant at Nexa Law, so I’m not neutral. I’ve also been through this exercise myself recently, working out whether it was worth me leaving Nexa and setting up my own firm. For me the answer was no; a small amount of extra money, but a good deal less free time and a good deal more stress and responsibility.

Most sole practitioners I’ve spoken to over the years have never sat down and worked out what owning a law firm costs them. The costs arrive one at a time and each feels unavoidable on its own (the insurance renewal is what it is, the lease was signed years ago, the practice management system is what everyone uses), and the compliance work happens in the evenings and on Sundays, so it appears on no ledger at all. Added together it’s very often the largest single item in the business.

Where the compliance officer rules have got to

On 31 July 2026 the Legal Services Board approved the SRA’s amendments to rule 8 of the Authorisation of Firms Rules, publishing its decision notice on 4 August. The changes were part of the SRA’s response to Axiom Ince, announced in June as safeguards to protect client money, and were due to start coming in from January 2027.

At the end of September the SRA paused implementation after sustained pressure from smaller firms, the Law Society and the SME & Boutique Law Firm Alliance. Aileen Armstrong, its executive director for policy and strategy, said the SRA was “pausing to take stock” and recognised “the risk of unintended consequences, particularly for smaller firms”. It says it will consult on options over the coming weeks. No new timetable has been given, and if the revised approach needs LSB approval, a January 2027 start looks very unlikely.

It’s worth being clear about what the pause is. The approved rules haven’t been revoked, and the SRA has said nothing to suggest it’s dropping the aim of separating compliance oversight from people who can run a firm on their own. What’s open is how it gets there, and in particular how it treats small firms. The reports of the pause also deal only with the compliance officer rules; they say nothing either way about the accountant’s report changes in the same package, so I wouldn’t assume those have stopped too.

As approved, the rules work like this. In any firm which, in its last completed accounting period, either had turnover above £600,000 or held client money with a maximum balance above £2m, an owner or manager with authority to unilaterally determine or direct significant management decisions can’t be the COLP or the COFA. That unilateral test is in rule 8.4 and applies to firms with more than one manager or owner. Sole owner-managers are dealt with separately in rules 8.5 and 8.6, and more harshly; over the turnover threshold they can hold neither role, and under it but over the client money threshold they can stay as COLP but must give up COFA. Neither of those rules has a unilateral qualifier, because a sole owner-manager has unilateral authority by definition. The word “unilaterally” was missing from the draft rules the SRA published in April and was put back during the LSB’s assessment, which helps multi-owner firms and does nothing for the smallest ones.

A few other features of the approved drafting matter for the costings. A compliance officer must ordinarily be a manager or employee of the firm (rule 8.2), so simply buying in an outsourced COLP or COFA service doesn’t appear to be enough on its own, although the SRA had promised guidance on using third-party compliance services. A COLP must be an individual authorised by an approved regulator, so it can’t go to your practice manager, however capable; the COFA has no equivalent requirement. And there’s a limited relief in rule 8.7 for a firm whose client money balance went over £2m for reasons that weren’t representative of its usual business, which won’t help a conveyancing firm whose ordinary completions take it over the line.

Because the shape of any revised rules is unknown, I’ve shown the worked examples both ways below. If the SRA comes back with something close to what the LSB approved, the “rules as approved” figures apply; if it drops the separation requirement for firms of this size, the “no compliance change” figures do. The truth will probably land somewhere in between.

How the examples work

Each of the six firms is illustrative, and the figures are invented, but the assumptions are on the page so you can substitute your own. Where a firm has staff I’ve modelled two routes onto a platform, because they produce very different numbers and principals tend to assume only the second exists. The first is to move the whole practice across, with the team travelling too and the whole book billed through the platform, so you receive the fee share on everything and keep carrying the employment costs. (Whether your people join as consultants in their own right or stay employed by your own service company is something to settle before you move.) The second is to let the team go and practise on your own account, which reduces your billing as well as your costs.

Two assumptions drive the answer more than anything else. The first is professional indemnity insurance. The SRA’s 2023 research on the PII market found premiums typically running at three to nine per cent of turnover, with a median of five, and that smaller firms pay a higher rate than larger ones doing the same work. Around one firm in five paid ten per cent or more, and firms heavily dependent on conveyancing have been reported paying as much as twenty per cent. I’ve used around six per cent for the general practices and twelve per cent for the conveyancing-led one, which is within the observed range rather than at the top of it.

The second is what a consultant actually spends. Accountancy, IT and telephony, marketing, subscriptions and a practising certificate are essentially fixed and don’t scale with your fee income, so I’ve used a flat £7,500 a year for a single consultant, which if anything is generous. All figures are annual and before tax, and anything shown as n/a is carried by the platform.

I’ve used a 75 per cent fee share throughout the tables. That’s Nexa’s published minimum, and some platforms sit at 55 to 65 per cent, which would change the figures considerably. Nexa’s share rises on a sliding scale to as much as 85 per cent as billing increases, and I come back to that after the tables, because it matters more than almost anything else here.

Firm one: the commercial sole practitioner billing £190,000

One solicitor working alone, turning over around £190,000 from commercial and employment work, with no client account and working from home with a serviced office for meetings. This firm is under both thresholds, so rule 8 never touched it, paused or not.

I’ve started with the example that doesn’t support my argument. If your practice doesn’t need a client account, carries modest insurance and has no staff, running your own firm is around £19,000 a year better than paying a fee share, and anybody telling you otherwise is selling you something. For this firm the question is really capacity and growth. The £19,000 is roughly forty hours of your own compliance, administration and business development time at a commercial charging rate, so if your billing goes from £190,000 to £250,000 because you’ve stopped being your own compliance department, the comparison inverts. If it doesn’t, stay where you are.

Firm two: the established sole practitioner billing £300,000

One solicitor with a part-time legal assistant, turning over around £300,000 across private client and commercial work, with a small office and a client account peaking well below £2m. Like firm one, it’s under both thresholds and unaffected by rule 8. On the own work only route I’ve assumed billing falls to £250,000, since losing your assistant costs you capacity as well as salary.

At 75 per cent this firm keeps about £15,500 a year more by staying as it is. At £300,000 of billing, though, you’d expect to be somewhere above the minimum rate; at 80 per cent the two positions are level to within £500, and at 85 per cent the practice moves route is about £14,500 ahead. This is the example where the fee share rate on its own decides the answer.

Firm three: the high street firm over the client money threshold

A sole owner-manager with two employed fee earners and an administrator, turning over around £470,000 from residential conveyancing and probate, with the client account peaking at about £2.4m in a busy completion month. Under the approved rules the principal keeps the COLP role but must hand COFA to somebody else, and because the peak comes from ordinary conveyancing volumes the rule 8.7 relief isn’t available. I’ve assumed the firm recruits a legal cashier and practice manager capable of holding the role.

With the rules as approved, both platform routes beat staying by a distance, £64,000 and £51,000. Take the COFA appointment away and both still win, but by £19,000 and £6,000. So the compliance rules made the gap much wider for this firm without being the cause of it; the cause is a cost base carrying about £158,000 of infrastructure and overhead before any compliance appointment, of which the insurance alone is £56,000.

The insurance assumption is doing a lot of the work, so it’s worth testing. At the market median of five per cent rather than twelve, the premium would be £23,500. With no compliance change the firm would then keep about £206,500, which is £13,500 ahead of the practice moves route at 75 per cent; at 80 per cent the practice moves route comes back to about £216,500 and is ahead again. A conveyancing-led firm paying the median rate isn’t a common animal, but if that’s you, the answer is a lot closer than the table suggests.

Keeping the team is worth about £13,000 a year more than shedding it, and comes with all the employer obligations the second route removes. I wouldn’t make that decision on £13,000; I’d make it on whether you actually want to be an employer, and whether your two fee earners are profitable rather than merely busy.

Firm four: the sole principal over the turnover threshold

A sole owner-manager with six staff including two employed solicitors, turning over around £780,000 across private client and commercial work. Under the approved rules, rule 8.5 applies in full and the principal can hold neither role, with no governance argument available, because rule 8.5 has no unilateral test. The COLP would have to be one of the employed solicitors and the COFA a new practice manager appointment. I’ve assumed a £14,000 uplift for the solicitor taking on the COLP role, which is modest given what’s being asked of them.

This is the firm the pause matters most to. With the rules as approved, moving the practice across is £28,500 better than staying even at 75 per cent. Without the compliance appointments, staying is £33,500 ahead at 75 per cent; at 80 per cent the practice moves route is about £5,500 ahead, and at 85 per cent it’s about £44,500 ahead. At £780,000 of billing you’d expect to be well above the minimum rate, so I still think the platform wins, but nowhere near as clearly as it did in August.

There’s another cost here which doesn’t appear in the table, if the rules come back in anything like their approved form. An employed solicitor a few years qualified would have a personal regulatory duty to report the serious breaches of the person who owns the firm, funds it and sets their salary. Whether that produces genuine independent challenge, or a compliance officer who is structurally unable to challenge anything, is a question the Law Society put to the SRA and never got a satisfactory answer to, and it’s probably one of the things the SRA is now looking at again.

Firm five: the two-director company

Two director-shareholders with eight staff and turnover of around £1.2m, where significant decisions are taken jointly and neither director can act alone. The firm is well over the turnover threshold, so rule 8.4 would apply to it, but whether it applies to either director turns on that word “unilaterally”. If the two genuinely take significant decisions together, then on the approved wording neither is caught and both can keep their compliance roles. The test reaches the constitution, the governance arrangements and usual practice, though, and usual practice is where firms come unstuck: if the articles say joint but in reality one of you runs the place, the rule bites.

The first two columns are firm-level figures, the own work only column is per director, and the final row is per director throughout. No compliance appointment is costed, on the assumption that the governance really is collective. If in usual practice one director runs the firm and the rules come in as approved, about £67,000 of compliance cost comes back and each director keeps £217,500, behind both platform routes.

On its own assumptions, this is the firm with the best case for staying. At 75 per cent each director is about £18,500 ahead of the better platform route, which is around £1,500 a month each for carrying the employment obligations, the lease, the borrowing, the insurance and the client account. What they also have is capital value on an eventual sale, which is real, although it’s the thing most small firm owners find is worth less than they assumed when they finally test it.

At £1.2m of billing, moving the whole practice across is the worst of the three routes at 75 per cent, because 25 per cent of £1.2m is a bigger number than the overhead it replaces. At 85 per cent it becomes the best, at about £281,500 per director, £30,500 ahead of staying. That’s the clearest example in this article of the fee share rate, and not the idea of a fee share, deciding the question.

Firm six: growing past the turnover threshold

A sole owner-manager who turned over £545,000 in the year just ended wins a substantial new client and turns over £670,000 the following year. Under the approved rules, at the end of that accounting period the principal stops being eligible under rule 8.5, the SRA approval expires automatically under the amended rule 13.7, and the firm needs a COLP and a COFA, both approved, having spent the year earning the turnover that triggered the requirement. This table looks only at the economics of the growth itself.

With the rules as approved, crossing £600,000 turned £125,000 of new work into £13,000 of benefit, and the compliance appointments would be a permanent addition to the cost base at every level above the threshold. That was the example that worried me most about the rules, because it penalises exactly the growth the profession says small firms should be aiming for. While the pause lasts, the problem goes away, and the growth is worth £71,000 to the firm against £93,750 on a platform. It would be worth reading the SRA’s revised proposals with this firm in mind, because any threshold-based rule creates the same cliff edge somewhere.

How the fee share scale changes things

Every table above uses 75 per cent, and that’s the minimum. Nexa’s published position is that the share is on a sliding scale from 75 per cent up to as much as 85 per cent as fees increase, with the extra paid as a top up on work billed on your own matters once you go over a certain level of billing. Work referred to you by Nexa or another consultant is on a lower scale (50 to 60 per cent), so the figures below assume the practice is billing its own clients, which is what a principal moving across would be doing.

I’ve kept the higher rates out of the individual tables, because a solicitor billing £190,000 won’t reach them and modelling everybody at the top of the scale would be dishonest. In the summary, read the 75 per cent column as the worst case and the 85 per cent column as what the same practice looks like once volume is doing its work. For each firm I’ve shown whichever platform route comes out better.

With the rules as approved, the platform won outright at every rate for firms three, four and six, which are the firms the rules caught hardest. With no compliance change, staying is ahead at 75 per cent for four of the six (firms one, two, four and five), and the platform is ahead only for firm three and the marginal growth in firm six. At 85 per cent the platform is ahead for five of the six and level for the smallest firm.

So, honestly, the pause weakens the regulatory part of my argument, and I’d rather say that than pretend otherwise. What it doesn’t change is that the fee share rate and the size of your cost base, especially insurance, decide most of these comparisons, and that’s true whatever the SRA does next.

The compliance appointment is also the assumption most open to argument. I costed it as a recruitment, at £45,000 fully loaded in firm three and £62,000 in firm four. If whatever the SRA comes back with allows a contracted arrangement at something nearer £12,000 a year, firm three would keep about £162,000 and firm four about £255,000 with the rules in force, which puts both somewhere between the two own firm columns above. Anybody offering you certainty on the point before the revised proposals are published is guessing.

What separates the two sides is less the money than everything sitting behind it. On a platform you’re neither a manager nor an owner of the authorised body, so rule 8.4 can’t apply to you, in whatever form it returns, and the COLP and COFA are provided. The platform carries the firm-level systems and the regulatory responsibility for the client account, the accountant’s report, anti-money laundering supervision, insurance and complaints, and you work within its onboarding, identity and source of funds processes. When the SRA changes rule 8 again, and the current programme makes it fairly clear that it will, that’s another firm’s implementation project.

What you give up in return

The fee share is permanent and applies to everything you bill for as long as you practise this way. It reduces as you build volume but never disappears, so over a twenty year career it’s a very large figure, and anybody who tells you the platform is free is either not being straight with you or hasn’t done the arithmetic.

You don’t build an equity interest in the authorised firm, and in the ordinary consultant model there’s no law firm business of your own to sell. Contractual books of business, service companies and transition arrangements can carry real value in particular structures, but none of it is the same as shares and goodwill in a firm you own. If your plan has always been to build something and sell it, that’s the strongest argument for staying where you are, and firm five is where it bites hardest. You also give up leverage in its purest form; the practice moves route keeps a good deal of it, but you’re keeping a margin on your team’s work net of the fee share rather than gross.

You take on platform risk, because your practising arrangements depend on the health and good standing of a firm you don’t control, so diligence on the platform is a serious exercise. And you still owe the Code personally in every respect; consultancy removes the obligations that come with owning and managing an authorised body, and none of the obligations that come with being a solicitor.

There are also practices for which the answer is simply to stay and comply: volume conveyancing at scale, legal aid, a firm with real goodwill and a succession plan already running, or a high street practice that clients actually walk into. Those firms need to be authorised and need the client account, and their answer is to build the compliance structure properly and price it into their fees.

The parts that aren’t on the ledger

I’ve spent a lot of words on the ledger, so I should be clear that it isn’t why I made the decision, and it isn’t why most people do.

The thing I value most about the model doesn’t have a price. It’s not being responsible for the regulatory burden; not spending a fortnight every year on the insurance renewal, chasing the broker and answering supplementary questions about your claims history; not being the person who has to remember the accountant’s report deadline, write the firm-wide risk assessment or work out what the latest consultation means for your systems. That work is real and relentless, and in most small businesses it happens in the evenings and at weekends because the day is for clients. I’d rather spend those evenings and weekends with my wife and my children. That’s a personal preference and not an argument, and it may change as my circumstances do, but for now it’s worth more to me than the numbers in the tables.

I should be equally clear that consultancy isn’t an easy life. It’s not working ten until two on three days a week while earning half a million pounds; it’s hard work, you eat what you kill, there’s no salary underneath you, and the months when the pipeline thins out are uncomfortable in a way that being employed never is. It can be lonely, with no corridor and nobody down the hall to sanity-check a clause at five o’clock on a Friday, so you have to build those relationships deliberately. It has all the ups and downs of running your own business, because that’s what it is, minus the regulatory machinery.

Some principals genuinely enjoy building a firm, employing people and creating something they can one day sell, and for them none of this is a good trade. For a great many others, the compliance obligations cost real money and real weekends and add nothing a client will ever notice or pay for, and the pause may only delay the next round of them.

What I’d do now

Don’t recruit a new COLP or COFA, or restructure the firm, for a January 2027 deadline that may well not happen in that form. Do respond to the SRA’s consultation when it comes out, because the shape of the revised rules, and especially how they treat sole owner-managers, is still open.

If you have more than one manager or owner, map your governance anyway: who takes significant decisions in practice rather than on paper, who controls the bank mandate, who authorises client account transfers, and whether any one of you could push a decision through alone. Whatever the SRA comes back with, unilateral control is the thing it’s trying to get at, and knowing the answer costs you nothing.

If you’re a sole owner-manager over either threshold, you were the person the approved rules caught hardest, and the person with most to gain from the pause. Use the time to work out who else could hold the roles and what it would cost, so you’re not starting from scratch if the rules return in a similar form.

If you hold client money, check where the accountant’s report changes have got to, as nothing reported about the pause says those have stopped. And if you’re under both thresholds, nothing in rule 8 changed for you, before or after the pause.

If you’re somewhere in the middle, recognising your own firm in one of the tables, the question I’d put to you is the one I eventually put to myself. For most traditional practices, the two things that most clearly justify carrying the machinery of an authorised firm are delivering reserved legal services through it and operating a client account. Neither is completely exclusive to an authorised firm, since the SRA’s freelance solicitor regime lets an individual carry on reserved legal activities on their own account, subject to its own conditions, but for a practice with employees and a client account the authorised firm is the ordinary route. If your practice depends on both, the structure is necessary and its cost is the price of the work. A great deal of commercial and advisory practice depends on neither, though. Shareholder agreements, commercial contracts, employment advice, settlement agreements, licensing and most corporate advisory work involve very little that’s reserved and can be run without holding a penny of client money. If that describes your practice, you’re maintaining an expensive structure to support work that doesn’t need it, and that’s true with or without the SRA’s rules.

I moved to a consultant model six years ago and didn’t do it for regulatory reasons, and the fee share scale is the part I most underestimated at the time. I’ve written more generally about becoming a consultant solicitor. If you want to talk it through, including what it would look like to bring your whole team rather than leave them behind, get in touch, and I’ll tell you if the answer for you is to stay where you are.

Disclosure: I practise as a consultant solicitor through Nexa Law Limited and may receive an introduction payment if you join as a consultant. All figures are illustrative and aren’t drawn from any actual firm or from my own arrangements. Fee share bands, thresholds and the treatment of a team moving across differ between platforms and are a matter for negotiation, so nothing here is a statement of the terms available to you. Nothing here is legal advice on your own regulatory or financial position. The rule references are to the amendments approved by the Legal Services Board on 31 July 2026 and set out in Annex A to its decision notice, the implementation of which the SRA paused at the end of September 2026.

Written by Steven Mather, a business solicitor acting on company sales and purchases. This is general information about the law, not legal advice on your situation. Law correct as at 13 October 2026.