How to Set Up a New Law Firm in the UK: Step-by-Step Authorisation Guide

To set up a new law firm in England and Wales is an exciting endeavour. But alongside business strategy, growth planning and market positioning, you also need to engage with regulatory obligations. Before you can provide reserved legal services to the public, you or your firm must obtain authorisation from the SRA under the Legal Services Act 2007 framework.

That authorisation ensures the firm meets certain standards, demonstrates suitability of owners/managers, and establishes proper systems and controls. This guide from MAR Legal walks you through the process step-by-step, from selecting your structure and gathering documentation through to post-authorisation obligations.

Do You Need Authorisation for a Law Firm?

Not every business providing legal work must be regulated by the SRA. The key distinction lies in whether your firm will carry out reserved legal activities (eg, advocacy, litigation, conveyancing, probate) or non-reserved services. The SRA outlines this in its guidance on Firm Authorisation. Solicitors Regulation Authority  If you will provide reserved services to the public, you must apply to the SRA for authorisation. Doing so without the right authorisation can bring regulatory action or prohibition from practice.

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Choose the Right Legal Structure for your law firm

Before submitting an application you should be clear about your firm’s structure. The SRA’s rules distinguish between:

• Recognised Sole Practice (an individual lawyer practising alone)
• Recognised Body (a firm in which all owners and managers are lawyers)
• Licensed Body (Alternative Business Structure – ABS) (a firm with non-lawyer ownership or management)
  These distinctions are set out in the SRA Authorisation of Firms Rules. Solicitors Regulation Authority  Choosing the correct category matters, as different requirements and approval processes apply (eg, ABSs face closer scrutiny of non-lawyer owners and material interests).

Check Eligibility of Owners and Managers

The SRA requires all proposed owners, directors, managers and compliance officers to demonstrate integrity, competence and suitability. See the guidance on Approval of Role Holders. Solicitors Regulation Authority  Important considerations include:

• No unsettled disciplinary or regulatory history
• Appropriate experience (for example a lawyer with at least three years’ practice is often expected) Compliance Office 
• Appropriate governance, ownership transparency and money-laundering controls
  Your application must identify who will fill key roles such as:
• Compliance Officer for Legal Practice (COLP)
• Compliance Officer for Finance & Administration (COFA)
• A “Head of Legal Practice” or “Head of Finance & Administration” in an ABS

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Prepare Your Business Plan & Risk Framework

The SRA application will require evidence of your proposed business model, sources of work, financial forecasts, professional indemnity insurance cover, anti-money-laundering (AML) procedures, conflict-of-interest policies, record-keeping systems and business continuity plans.
A useful article, “Starting a new law firm (Part 4): Applying to the SRA”, sets out how firms must cover matters like funding, contingency arrangements and data protection. communities.lawsociety.org.uk  Key items include:

• Projected turnover and cost base
• Professional indemnity insurance (PII) quotation meeting SRA minimum terms
• Risk assessment of key person dependency, IT failure, fraud, regulatory breach
• Policies and systems for client care, complaints handling, confidentiality, accounts rules

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Complete the Application – Forms and Submission

The principal form is FA1 (or FA1B for certain entity changes). You may need FA2 for individual role-holders (owners, managers) if not exempt. Regulation & Compliance Office  Submission is made via the SRA’s mySRA portal. Ensure:

• All required forms completed accurately
• Supporting documents uploaded (eg corporate structure charts, insurance quote, AML policy)
  The “How we make decisions on authorisation” guidance explains how the SRA assesses applications under its regulatory objectives. Solicitors Regulation Authority  Typical time to decision can vary—recently some recognised bodies have been approved in around six weeks, but ABS applications may take longer (three to four months or more) depending on complexity. communities.lawsociety.org.uk 
  

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Setting Up Systems Before You Open

Authorisation is only the start. Your firm must have effective systems in place from day one. Areas to ensure include:

• Client onboarding and identification (AML checks)
• Compliance with the SRA Standards & Regulations (principles, conduct rules, accounts, transparency)
• Supervision and training of fee-earners
• Record-keeping and audit trails
• Business continuity/resilience arrangements
  The SRA expects firms to be able to demonstrate proper governance and controls in meeting its regulatory objectives (protection of consumers, proper administration of justice, etc.). Solicitors Regulation Authority 
  

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Post-Authorisation Obligations

Once authorised, firms must fulfil ongoing obligations including:

• Paying the annual renewal fee each October
• Notifying the SRA of key changes (eg change of COLP/COFA, change of address, merger, acquisition) within seven days. Solicitors Regulation Authority 
• Maintaining professional indemnity cover
• Complying at all times with the SRA’s standards and regulations
• Reporting certain matters (eg cyber-breach, fraud, serious risk to clients or public) immediately

Failure to comply can lead to regulatory sanction, cancellation of authorisation or restrictions on practice.

Common Pitfalls & How to Avoid Them

When working with start-up firms, we at MAR Legal often identify recurring issues which delay approval or cause problems post-authorisation:

• Incomplete or inconsistent application – Ensure all forms are completed and consistent with supporting documents.
• Unclear governance structure – Lack of clarity over who holds material interests, who will supervise, or where conflicts may arise.
• Insufficient professional indemnity insurance evidence – The SRA will not progress an application without a valid quote meeting the SRA Minimum Terms and Conditions. Compliance Office 
• Weak policies and controls – Draft clear AML, complaints, conflicts, data protection and continuity policies from the outset.
• Insufficient business continuity planning – Especially with small firms, over-dependence on one individual is a risk flagged by the SRA. communities.lawsociety.org.uk 
• Delays in role-holder approvals – Even if the firm entity is submitted, delays in approving COLP/COFA or owners can hold up full authorisation. Form FA2 may apply. Solicitors Regulation Authority.

Why Expert Support Matters

AGiven the regulatory complexity and high stakes for new firms, expert support helps you:

• Choose the right structure (sole practice, recognised body or ABS)
• Prepare role-holder schedules and ownership charts
• Draft compliance manuals, risk assessments and internal policies
• Liaise efficiently with the SRA, pre-empt queries and expedite approval
  At MAR Legal we specialise in assisting new firm authorisation, regulatory set-up and ongoing compliance — allowing you to focus on your business while we handle the regulatory foundation.