The short answer
An SRA intervention closes a firm immediately and transfers control of its client money and files to the regulator. The power comes from Schedule 1 to the Solicitors Act 1974, with parallel powers for licensed bodies under Schedule 14 of the Legal Services Act 2007. The threshold is lower than most practitioners assume: the SRA needs a reason to suspect dishonesty, not proof of it. Interventions have risen sharply, with 35 carried out in under six months of the current practising year against 42 in the whole of 2024-25.
Suspicion, not proof
In Sritharan v Law Society [2005] EWCA Civ 476 the Court of Appeal confirmed the test is a reason to suspect dishonesty rather than proof of it, with the Solicitors Disciplinary Tribunal deciding later whether wrongdoing actually occurred. A firm can be closed and its principals subsequently cleared. That is the design, not a defect.
What an intervention actually is
A statutory power to close a regulated practice immediately in order to protect clients and client money. Once exercised, the firm can no longer act for anyone.
In practical terms the SRA takes control of all money the firm holds, which is then held on a statutory trust, and takes possession of the firm’s documents and papers. An intervention agent, usually another local firm, is appointed to identify who the money and files belong to and arrange their return.
The legal basis is Schedule 1 to the Solicitors Act 1974 for recognised bodies and individuals, with equivalent powers for licensed bodies under Schedule 14 of the Legal Services Act 2007.
Courts have consistently described it as a drastic power exercised for a protective purpose. In Buckley v Law Society (No 2) [1984] 3 All ER 313 the court acknowledged the real risk intervention poses to firms while confirming it is a power Parliament deliberately conferred. In Dooley v Law Society (unreported, 15 September 2000) the High Court stated the purpose plainly: protecting the public from dishonest or incompetent solicitors.
The statutory grounds and the threshold
This is where most commentary goes wrong, and where the practical risk sits.
The grounds in Schedule 1 are broader than dishonesty. They include suspected dishonesty, failure to comply with rules made under the Act, undue delay in connection with a matter the solicitor was instructed on, bankruptcy or insolvency events, and circumstances where a solicitor has ceased to practise or is incapacitated.
On the standard, the position was settled in Sritharan v Law Society [2005] EWCA Civ 476 and applied in Sheikh v Law Society [2006] EWCA Civ 1577: the SRA needs a reason to suspect dishonesty, not proof of it. Whether wrongdoing actually occurred is a question for the tribunal afterwards.
That has two consequences worth stating directly. A firm can be intervened in and its principals later cleared of any finding. And the fact of intervention does not establish that anyone acted dishonestly, which matters both for how the profession reads an intervention notice and for how a solicitor from an intervened firm explains their position to a prospective employer.
What actually triggers an intervention
Client money remains the dominant factor, but the pattern in recent activity is broader than outright fraud.
| Trigger | What it looks like in practice |
|---|---|
| Client account shortfall | Reconciliations that do not balance, unexplained transfers, delays in returning funds |
| Suspected dishonesty | Evidence suggesting misappropriation, whether or not proved |
| Abrupt closure | A firm ceasing to trade without an orderly wind-down, leaving matters in limbo |
| Accounts Rules breaches | Systemic failures in record-keeping, reconciliation or client account operation |
| Financial instability | Insolvency events, inability to meet obligations, pressure on client account |
| Failure to engage | Not responding to the regulator, not producing records when required |
The last of these is underestimated. Failure to engage with the regulator is itself a ground, and it converts a manageable problem into an intervention faster than the underlying issue would have.
Conveyancing practices carry structurally higher exposure because of the volume and value of client money moving through them, which is also why conveyancing recurs through the SRA’s AML enforcement. Our guide to what regulation 18 requires covers the related compliance obligation.
PM Law and the post-Axiom effect
The intervention into PM Law Limited is the defining recent example, and the figures are substantially larger than early reporting suggested.
The SRA confirmed suspected fraud involving the improper removal and misuse of £39.5 million of client funds. Claims on the SRA Compensation Fund exceeded £20 million, with £9.31 million paid out as at the Law Society’s update.
That followed the Axiom Ince collapse, which involved missing client funds reported at over £60 million and attracted sustained criticism of the regulator for the speed of its response. The Legal Services Board’s review of the SRA’s handling of that matter is part of a wider pattern of scrutiny, and the LSB has since taken further enforcement action against the SRA.
The consequence for firms is a regulator with strong institutional reasons to act earlier rather than later. That is visible in the intervention numbers, and it is visible in the cost: compensation fund contributions are rising sharply, with individuals facing £170 and firms £2,170 subject to approval, as our guide to practising fees for 2026/27 explains.
Who pays for interventions
The costs of an intervention are recovered from the SRA Compensation Fund, which is funded by contributions from the profession. Every intervention is therefore paid for by other firms, which is the mechanism connecting a single firm’s collapse to a sector-wide cost increase.
What happens to the firm and its people
The firm
Intervention is effectively terminal. The practice loses authorisation, cannot act, and in most cases does not resume. Disciplinary proceedings frequently follow, and the published intervention notice is permanent and searchable.
Solicitors employed there
This is the part most coverage omits. A practising certificate is a personal authorisation and does not lapse because the firm’s authorisation has been withdrawn, so a solicitor at an intervened firm remains a solicitor and can seek employment elsewhere.
Three practical points follow. Files are no longer yours to transfer once the SRA has possession, so client requests go to the intervention agent. Personal undertakings survive the firm’s closure and are not discharged by it. And where the intervention arose from suspected dishonesty, individual conduct will be examined, with compliance officers in particular facing scrutiny of what they knew and reported.
Clients
Client money is protected from the moment of intervention, though identifying ownership takes time, frequently because the records were poor. Where money has been lost through dishonesty or a failure to account, the Compensation Fund may make a discretionary grant of up to £2 million per claim, applied for within 12 months. Our guide to what happens when a firm closes sets out the client position in full.
The warning signs that precede intervention
Interventions rarely arrive without antecedents. The pattern across published outcomes is recognisable, and most of it is visible internally long before the regulator acts.
- Reconciliations that stop being done, or stop balancing. The single most reliable early indicator, and the one most often rationalised as a temporary problem.
- Residual client balances accumulating. Small sums left on client account across many closed matters signal process failure and attract attention.
- Delay in returning client money. Undue delay is itself a statutory ground.
- Accountant’s report qualifications. A qualified report is a documented warning the regulator will already have seen.
- Cash flow pressure meeting client account. The point at which a firm’s own financial difficulty starts influencing decisions about client money is the point at which intervention becomes a realistic prospect.
- Non-response to the regulator. Missed deadlines and unanswered requests escalate matters that would otherwise have been resolved.
The practical conclusion is uncomfortable but useful. Almost all of these are known to someone inside the firm well before the SRA acts, and the reporting duty under the Code exists precisely for that moment. Our guide to the COLP role covers where that duty sits.
Reducing intervention risk
- Reconcile client account on time, every time, and escalate any discrepancy the same week
- Clear residual balances rather than carrying them across closed matters
- Treat a qualified accountant’s report as an internal emergency, not a formality
- Respond to every regulator communication within the deadline, even to say more time is needed
- Keep firm finances structurally separate from any decision touching client money
- Ensure the COLP and COFA have genuine visibility and the authority to act on what they see
- Have a wind-down plan, because an orderly closure and an intervention have very different consequences
Frequently asked questions
What is an SRA intervention?
A statutory power under Schedule 1 to the Solicitors Act 1974 allowing the SRA to close a firm immediately, take control of its client money, which is then held on statutory trust, and take possession of its files. Licensed bodies are covered by Schedule 14 of the Legal Services Act 2007.
Does intervention mean the solicitors were dishonest?
No. Sritharan v Law Society confirmed the threshold is a reason to suspect dishonesty rather than proof of it. Whether wrongdoing occurred is determined afterwards by the Solicitors Disciplinary Tribunal, and a firm can be intervened in with its principals later cleared.
What are the grounds for intervention?
They are broader than dishonesty and include failure to comply with rules, undue delay in connection with a matter, bankruptcy or insolvency events, incapacity, and a solicitor ceasing to practise. Failure to engage with the regulator is a significant practical trigger.
How many interventions does the SRA carry out?
Activity has risen sharply. The SRA carried out 35 interventions in less than six months of the current practising year, against 42 in the whole of 2024-25.
Can a solicitor still practise after their firm is intervened in?
Yes. A practising certificate is a personal authorisation and does not lapse because the firm’s authorisation has been withdrawn. What the solicitor cannot do is continue acting through the closed firm, and personal undertakings given are not discharged by the closure.
Who pays for an intervention?
The costs are recovered from the SRA Compensation Fund, which is funded by contributions from the profession. Rising intervention activity and large claims following firm collapses are a direct driver of increased contributions.
The key points
- Suspicion is the threshold: the SRA needs a reason to suspect dishonesty, not proof
- The grounds are broader than fraud: undue delay, insolvency and non-engagement all qualify
- PM Law involved £39.5 million: substantially larger than early reporting suggested
- Activity is rising: 35 interventions in under six months against 42 in the previous full year
- The profession pays: intervention costs come from the Compensation Fund, funded by contributions
The practical takeaway
The most useful thing to understand about intervention is how low the threshold is and how broad the grounds are. It is not a sanction imposed after a finding of misconduct. It is a protective step taken on suspicion, and a firm can be closed before anyone has determined whether wrongdoing occurred.
The corollary is that the warning signs are almost always internal and almost always earlier than the regulator’s involvement. Reconciliations, residual balances, qualified reports and unanswered correspondence are visible to someone in the firm long before they are visible to the SRA, and that gap is where the risk is actually managed.