For a decade, law firm practice management described an efficiency problem. Time recording, matter workflow, billing, storage. That framing has aged badly. Four regulatory changes landed between March and July 2026, and none of them ask whether your firm is efficient. They ask whether your firm can prove what it did, when it did it, and who was responsible.
Law firm practice management in England and Wales now sits inside four live regulatory workstreams: the SRA’s revised supervision guidance, published 12 June 2026 after the Court of Appeal’s decision in Mazur; the client money rule package awaiting Legal Services Board approval; the amended Money Laundering Regulations, in force since 30 June 2026; and the Legal Ombudsman’s proposed staged case fees, open for consultation until 2 September 2026. Each requires firms to evidence process rather than assert it.
The question the regulator is now asking
Ask a supplier what practice management software does and you will hear about time capture, matter workflow, document automation and billing. The promise is the same everywhere: do the same work in fewer hours.
That was a reasonable pitch in 2019. In July 2026 it answers the wrong question.
Across four months, three separate bodies have moved in the same direction. The Solicitors Regulation Authority rewrote its supervision guidance. HM Treasury amended the Money Laundering Regulations. The Office for Legal Complaints proposed attaching a price tag to missed complaint deadlines. None of them cares how quickly your fee earners record time.
What each of them wants is an audit trail. Your practice management system is where that trail exists, or where it turns out not to.
Supervision after Mazur: your case management system is now evidence
In March 2026 the Court of Appeal handed down CILEX and others v Mazur and others [2026] EWCA Civ 369. The court held that an unauthorised person may lawfully carry out tasks within the conduct of litigation for and on behalf of an authorised individual, provided that individual retains responsibility and exercises proper direction, management supervision and control.
The High Court had said something close to the opposite. Its decision alarmed litigation departments, debt recovery teams and volume claims practices across the profession, because a good deal of ordinary mixed-team working suddenly looked unlawful.
The Court of Appeal restored a workable position. The SRA then took ten weeks to explain what it expects. Its revised guidance on effective supervision was published on 12 June 2026, and it grew from nine pages to twenty-four.
The guidance introduces no new rules. What it changes is the standard of proof. Two passages matter for anyone responsible for practice management.
First, the SRA accepts that delegation can happen through defined work processes and case management systems, not only through matter-specific instructions, provided escalation procedures are clear and supervisors keep oversight of how matters progress.
Second, firms must be able to evidence the supervision arrangements they chose for each area of work, and the risk-based reasons for choosing them.
Read those together and the implication is uncomfortable. If your system names a solicitor as matter supervisor, and that solicitor has no practical visibility of the caseload, the system is recording something that is not true. Somebody configured it that way. Under the revised guidance, that configuration is the evidence.
The guidance also reaches technology directly. Where a firm uses AI tools to deliver legal services, outputs need appropriate human review, and an authorised individual retains ultimate responsibility for the work produced. File review schedules, escalation triggers, supervisor allocation and AI review logs stop being HR policy. They become system configuration.
Client money: the accountants’ report becomes a system output
On 2 June 2026 the SRA confirmed it had submitted rule changes to the Legal Services Board for final approval, following its consultation between December 2025 and February 2026.
Under the new rules, every law firm that holds client money will submit an annual accountants’ report to the SRA and provide further information through a declaration. Firms relying on an exemption will have to state their exemption status. And fixed financial penalties will be extended to cover late or non-submission.
That last point deserves a second reading. Late submission of an accountants’ report becomes a fixed penalty event. Not a supervisory conversation. A penalty.
Sarah Rapson, the SRA’s Chief Executive, framed the package around earlier intervention, saying that “protecting client money is one of our most important responsibilities” and that the reforms would help the regulator identify risk sooner.
Subject to LSB approval, the rules are expected to come into force by early 2027.
Whether your firm produces a clean report on time is not really an accounting question. It is a function of reconciliation discipline, residual balance policy, and whether your ledger data survives contact with a reporting accountant who has to certify it. Those are practice management questions, and the answer to all three lives in your system.
The COLP and COFA separation threshold, and the number everybody got wrong
The second half of the SRA package changes who can hold compliance roles.
Higher risk firms with a turnover of more than £600,000, or holding more than £2m of client money, will be required to make sure that individuals who can make significant decisions about how the firm is run cannot also be the compliance officer for legal practice or the compliance officer for finance and administration. A partial exemption applies to smaller sole owner manager firms, where separating roles presents practical difficulty.
Note the conjunction. It is or, not and. A firm turning over £700,000 that holds no client money at all is caught. So is a firm turning over £300,000 that holds £2.5m.
Several compliance briefings, and a number of legal software blogs following them, report the separation threshold as turnover above £600,000 and client money above £500,000.
That figure came from the December 2025 consultation paper. It is not the figure in the rules submitted to the Legal Services Board on 2 June 2026, which sets the client money threshold at £2m and joins the two tests with or.
If your firm has assessed itself as out of scope on the basis of the £500,000 figure, that assessment was made against a proposal, not a rule.
This is a governance change rather than a software change. It still lands on practice management, because somebody has to be appointed, the SRA has to be told, and the appointment has to be evidenced. Firms already tracking notification obligations will recognise the pattern from the SRA’s separate proposals requiring advance notice of mergers and new client accounts.
Complaints handling stops being a back-office task
In June 2026 the Office for Legal Complaints opened a twelve-week consultation on the Legal Ombudsman’s scheme rules, case fees and publication policy. It closes at midday on 2 September 2026.
The context is volume. Complaints to the Legal Ombudsman rose 37% in 2025/26, with more than 14,000 new complaints received. One statistic drives most of the proposals: one in four people who escalated a complaint said they never received a final response from their provider.
The proposed case fee structure replaces the current flat £400 with a staged charge.
| Stage at which the complaint resolves | Proposed fee |
|---|---|
| Early resolution | £200 |
| After investigation, no ombudsman decision | £750 |
| After an ombudsman’s final decision | £1,500 |
| Additional charge where no final response was issued within eight weeks, whatever the outcome | £400 |
Under the proposals every complaint accepted as within the Ombudsman’s jurisdiction becomes liable for a fee unless a waiver test is met. The waiver applies where the complaint is resolved in the lawyer’s favour or dismissed, and the Ombudsman is satisfied the firm took all reasonable steps to resolve it at first tier.
Winning is no longer enough. You have to be able to show what you did in the first eight weeks.
The Ombudsman also proposes a twelve-year longstop on complaints, dismissal where a complainant cannot show any impact, and a move towards publishing every final ombudsman decision, though full publication is not expected before 2027/28.
Strip away the policy language and one line remains. Under these proposals, a missed eight-week deadline costs £400. A missed eight-week deadline is a diary failure. Diary failures are practice management failures.
Any change to the scheme rules or case fees needs approval from the Legal Services Board and, where applicable, the Lord Chancellor.
AML: what changed on 30 June, and what is coming
The Money Laundering and Terrorist Financing (Amendment) Regulations 2026, SI 2026/621, brought most of their provisions into force on 30 June 2026. They amend the 2017 Regulations rather than replacing them.
Three changes matter for most firms. Mandatory enhanced due diligence based on geography now applies only where the other party is established in a country on the FATF Call for Action list, which currently means North Korea, Iran and Myanmar. Euro-denominated thresholds have been replaced with sterling equivalents. And simplified measures remain available on pooled client accounts, subject to conditions, with pooled client account holders expected to provide underlying client identity information on request. Legal privilege is expressly protected, and providing that information does not breach a duty of confidentiality.
None of this is a new regime. All of it means policies, controls and procedures, risk assessments and training materials need reviewing against the amended text. Firms that treat AML documentation as a set of files rather than a live system have been on the wrong end of that gap before, as recent enforcement against firms fined over AML compliance failures and long-running breaches shows.
The larger shift is further out. In June 2026 HM Treasury published its consultation response confirming that the Financial Conduct Authority will become the single professional services supervisor for anti-money laundering and counter-terrorism financing, taking over from the SRA and the other professional body supervisors. The Financial Services and Markets Bill, introduced in May 2026, contains the enabling clauses. HM Treasury has acknowledged that implementation will take several years, and no go-live date has been set.
The practical reading for firms is straightforward. Your AML records will eventually be examined by a supervisor with a different enforcement culture, broader powers, and a fee regime funded on full cost recovery. Documentation that satisfies an SRA thematic review will not automatically satisfy an FCA inspection.
What to ask your practice management supplier
Most procurement conversations are organised around features. The questions below are organised around evidence, which is what the four changes above have in common.
Eight questions to put to a practice management supplier in 2026
Take this to a demo. The answers will be more revealing than the feature list.
- Can the system produce a supervision audit trail per matter, showing who directed the work and when?
- Can it enforce escalation rules, or does it only record them after the fact?
- Can it generate the ledger data a reporting accountant needs, without manual reconstruction?
- Does it flag residual balances and dormant client account entries by age, automatically?
- Can it evidence the date a complaint was received and the date a final response was issued?
- Does it hold a firm-wide risk assessment and link client and matter risk assessments to individual files?
- Where AI features are used, does it record what was generated, who reviewed it, and when?
- Does the supplier commit contractually to where client data is hosted and who may access it?
One further point, because it appears on a great many supplier websites. The SRA does not operate any approval or accreditation process for legal software. No product is SRA approved, because there is nothing to be approved by. Suppliers that describe themselves as SRA compliant are describing a design intention, not a regulatory status. Some of them say so plainly on their own sites. Others do not.
Responsibility for compliance sits with the firm and, in the case of new technology, with the compliance officer for legal practice. It cannot be bought in with a licence.
Frequently asked questions
What is law firm practice management?
Does the SRA approve or accredit practice management software?
When do the new SRA client money rules come into force?
Which firms must separate the COLP and COFA roles?
What is the eight-week rule for complaints, and what would it cost?
Do the 2026 Money Laundering Regulations replace the 2017 Regulations?
Does the SRA’s revised supervision guidance create new obligations?
What to do before the end of 2026
Four dates, four actions.
- Now. Read the revised supervision guidance and compare it against how supervisors are actually allocated in your case management system. Where the two disagree, the system is the record.
- Before 2 September. Model your complaints volume against the proposed staged fees, and check how many of your files received a final response inside eight weeks last year. Then respond to the consultation.
- Before the LSB decides. Test whether your turnover or client money balances cross the £600,000 or £2m thresholds. If they do, work out who is appointable as COLP and COFA under the separation requirement.
- This quarter. Review your AML policies, controls and procedures against SI 2026/621, and start documenting on the assumption that a different supervisor will eventually read them.
None of this requires new software. It requires knowing what your existing software can and cannot prove. That is a different question from the one most firms have been asking, and it is the one the regulator has started asking back.
This article describes regulatory developments in England and Wales as at 10 July 2026. It is not legal advice. Rules submitted to the Legal Services Board are subject to approval and may change.