For many transactions, a solicitor's client account works perfectly well. But for complex, high-value deals, it's worth asking whether it's still the right tool.
More COFAs, Finance Directors, and Managing Partners at UK law firms are asking exactly that question. Not because client accounts are going away, but because the demands they place on firms have grown, and better alternatives now exist for certain types of work.
Here's a clear breakdown of how the two models compare.
A client account is a bank account held by your firm to keep client money separate from its own funds. Under the SRA Accounts Rules, your firm must maintain accurate ledgers for every matter, reconcile regularly, and submit to an annual accountant's report.
The rules exist for good reason. But the burden is real: your accounts team owns every step of the process, and your firm carries the operational and regulatory risk of everything that moves through the account. That includes fraud, APP scams, misdirected payments, and the cost of manual reconciliation across complex, multi-party transactions.
With a digital escrow arrangement, a regulated third party holds the funds, not your firm. That provider verifies all transaction parties, validates bank account details to guard against fraud, and releases payment only when the agreed contractual conditions are satisfied.
The practical shift is significant: your firm moves from fund custodian to transaction manager. The operational complexity of holding and distributing funds transfers to the escrow provider. Your AML obligations remain with you throughout, but the administrative weight of fund custody sits elsewhere.
At Shieldpay, that's exactly the model we've built. Our FCA-regulated digital escrow service holds funds in ring-fenced, safeguarded accounts with our banking partners Citi and ClearBank, with setup typically completed in 3 to 5 business days.
The client account model works well for routine, lower-value matters where fund-holding is short and the process is straightforward. For more complex transactions, the gap widens.
Multi-party M&A deals: Verifying hundreds of shareholders, managing holdbacks and earnouts, and distributing funds across multiple recipients simultaneously is where manual client account processes create real friction. Digital escrow automates that verification and distribution, significantly reducing both the time and the risk involved.
Property transactions: Conveyancing fraud remains one of the biggest threats to law firms handling client money. Digital escrow adds a meaningful layer of protection through automated bank account validation, reducing the risk of misdirected or fraudulent payments at the point they're most vulnerable.
Litigation settlements: When settlement funds need to reach hundreds or thousands of verified claimants, the client account model simply wasn't designed for that volume. A digital escrow service handles it at scale, without putting additional pressure on your accounts team.
Most firms won't need to choose one model over the other entirely. The question is which tool is right for which transaction.
Keep the client account for routine, low-complexity matters where your existing process is well-managed. Consider digital escrow when:
This isn't a static picture. In October 2025, HM Treasury confirmed the government's decision to appoint the FCA as the single AML/CTF supervisor for law firms, replacing 22 professional body supervisors. Primary legislation is still required and full transition isn't expected until 2028/29, but the direction is set: more consistent, more data-driven oversight of how firms manage financial crime risk.
Working with an FCA-regulated escrow provider won't replace your firm's AML obligations. But it does mean your fund-holding and payment processes are already operating within a well-supervised, compliant framework, and that matters as scrutiny increases.
Shieldpay's own research found that 67% of lawyers believe the risk of holding client money has increased, and 82% see room to modernise how it's managed. The shift is already underway.
Shieldpay has processed over £18 billion in escrow transactions and is trusted by more than 40 of the UK's top 100 law firms for M&A, property, litigation, and commercial deals.
Our Verify, Hold, Disburse framework is built for the transactions where client account processes create real friction. We handle the verification of all parties, the safeguarding of funds, and the distribution, so your team can stay focused on the legal work.
Speak to a payments expert to find out how digital escrow could work alongside your existing processes.