An alliance of SME and boutique law firms have called on the Solicitors Regulation Authority (SRA) to rethink proposals to separate the compliance officer for legal practice (COLP) and compliance officer for finance and administration (COFA) roles from “individuals with unilateral management control”.
The SME & Boutique Law Firm Alliance describes itself as “an independent collective created to give smaller and boutique law firms a stronger voice in regulatory and policy decisions”.
Speaking to this publication, founder Jade Gani said the alliance has brought firms and professionals together to raise concerns around the practical impact of the SRA’s proposals, which will see firms with a turnover of more than £600,000, or holding more than £2 million of client money, be required to separate COLP and COFA roles so that no single individual can both run a firm and oversee its compliance.
In August the Legal Services Board approved an addendum to Rule 8 of the Solicitors Regulation Authority (SRA) Authorisation of Firms Rules, with the new requirements set to be phased in from January 2027.
The alliance plans to publish an open letter to SRA chief executive Sara Rapson later this week, asking for evidence of how the threshold of £600,000 was reached and what the proposed restrictions on owner-managers will mean in practice.
A £600,000 turnover does not make a firm large or risky, the letter explains. While the alliance says it is supportive of “robust regulation and effective measures to protect client money”, it believes the structural reform being proposed could lead to the appointment of junior staff or external recruits to the COLP and COFA positions “simply to satisfy a structural requirement”, forcing firms to absorb recruitment and outsourcing costs in the fight for talent in a limited pool of experienced candidates.
Implementation should be paused while concerns are addressed, the signatories add.
Gani, who runs boutique firm Circe Law, said there is a lack of clear evidence that the proposals address the failures they are intended to prevent.
“Turnover is not a proxy for risk, complexity or governance”, she said. “A small owner-managed firm can exceed £600,000 in turnover without suddenly becoming a large organisation requiring an entirely different compliance structure.
“The independent review into PM Law identified serious shortcomings in intelligence aggregation, financial scrutiny and regulatory escalation. That makes the question even more pressing: what evidence demonstrates that separating owner-managers from COLP and COFA roles would have prevented those failures?
“The SME & Boutique Law Firm Alliance has brought firms and professionals together because there is a real concern that the practical impact of these proposals has not been properly understood. We are not asking for weaker regulation. We are asking for smarter, evidence-based regulation.”
Kate Burt, a solicitor and the CEO of HiveRisk, said firms are already thinking about how they will resource and fund these senior roles. “Larger practices generally have the management depth to absorb the change, but many smaller firms have neither a ready pool of suitably experienced role-holders nor the financial capacity to recruit at short notice”, she explained.
“Some are already pausing strategic hires, investment and growth plans pending certainty from the SRA.”
There is a “real risk” the proposals could destabilise firms and constrain their growth, Burt added.
Peter Redmond, managing director at conveyancing law firm Clutton Cox, suggested there is a closer relationship between the SRA’s proposals and its handling of the PM Law fallout “than the regulator would care to admit”.
The failures identified in the recently published Jenner & Block review showed a regulator that is “unable to piece together” information it already has, rather than any lack of governance, Redmond said.
He added: “Rather than fixing this internal failure, the SRA is deflecting the regulatory burden back onto the profession. Pushing forward with the mandate to separate COLP and COFA roles, despite considerable consultation pushback, simply reinforces the profession’s view that the SRA simply lacks the ability or the resource to regulate effectively.
“The proposals raise a very simple question to which nobody seems to have the answer. If a firm legitimately cannot secure a suitable COFA then what is the SRA’s enforcement plan? I have been told that the SRA would likely rely on fixed penalties which in turn will place undue pressure on owners to nominate unqualified candidates merely to satisfy an administrative mandate. Forcing artificial compliance to avoid a fine will inevitably increase consumer risk which is exactly what the SRA are apparently trying to avoid.”
He concluded: “We are not opposed to regulation and there a lot of people within the SRA who do good work. However, the entire profession is crying out for smarter regulation.”
A separate letter to the outgoing and incoming presidents of the Law Society, Mark Evans and Brett Dixon, will also call on the membership body to raise the issue as an agenda item at its upcoming AGM on 14th October 2026. The alliance will seek the necessary support for a special AGM if it is not, the letter warns.
4 responses
The most powerful argument for self-regulation was never convenience. It was liberty.
A legal profession independent of the state is necessary so citizens have lawyers who can challenge the state without fear. Remove that, and you weaken the rule of law itself. That is why the Law Society and eminent judges warned against the Legal Services Act 2007. It abolished self-regulation anyway.
The fallout is now a matter of public record. The reported Jenner & Block review into PM Law highlights failures in intelligence aggregation, financial scrutiny, and regulatory escalation. And the SRA’s answer? Not to rebuild the capability it dismantled, but to punish the SME/boutique law firm market.
It is one thing to punish a firm that breaks AML rules. It is quite another to force the whole SME/boutique sector to restructure, with no evidence that it would have prevented PM Law. We are watching the legal profession regulate itself out of existence, slice by slice.
As Lord Bingham reminded us in The Rule of Law, the rule of law depends on justice being administered by those truly independent judges free from political pressure, and by extension, a legal profession free from the state. He described a system where all authorities, public or private, are bound by laws publicly made and administered in the courts, not by a regulator that abolished its own risk monitoring function in 2013.
Now is the time for the Law Society to return to basics and defend, as Bingham did, an independent profession as a guarantor of justice, and to recover independence before there is nothing left to regulate.
Without it, there is no profession.
I have sympathy with both sides here. Jade Gani is right that turnover is a crude proxy — I know £500k firms holding eye-watering sums on completion day and larger firms that rarely touch client money. But the underlying problem the SRA is trying to fix is real: one person wearing every compliance hat means no second pair of eyes when something looks wrong. Feels like the measure should be what a firm holds and how it’s controlled, not what it bills.
Francis I agree with the problem they are trying to fix but this wont fix it. Do you for one minute believe that if someone else had been the colp/cofa at PM Law that the MD still wouldn’t have taken the money that he did? This isn’t the rule that needs looking at. What needs looking at is bringing back the risk centre at the SRA so they have capacity to act on the reports of these breaches like they should have done on Axiom, SSB and PM. Not make smaller firms the target and cause them to close or change regulator.
If this change affects you and you wish to sign the letter we are sending please could you sign the open letter to the SRA – https://smeblaw.co.uk/