Quick answer
The Law Society published its small firm manifesto on 13 October 2026. Its research found that 85% of small firms see recruitment as their biggest challenge, so it asks the government to fund solicitor apprenticeships for small firms regardless of age and to give clearer guidance on the SQE. It also calls for the proposed Interest on Lawyers’ Client Accounts scheme to be dropped, for simpler audits for smaller firms, for law firms to be covered by late payment legislation and for tax relief on legal technology. None of this is law yet, so plan your hiring, client account and cash flow on today’s rules.
What is in the Law Society’s small firm manifesto?
The manifesto, published on 13 October 2026, is built on 20 in-depth YouGov interviews with small and medium-sized law firms, an economic analysis by the Centre for Economics and Business Research and the Society’s own focus groups (Law Society: small firm manifesto). Its headline finding is that 85% of small firms say recruitment is their biggest challenge.
Law Society president Mark Evans said that in rural communities and small towns “sole practitioners and small law firms are there to support people”, adding: “Their sustainability isn’t just a legal sector issue, it’s a public interest matter” (New Law Journal).
The asks fall into five groups, as reported by Legal Futures:
- Recruitment: solicitor apprenticeship funding for small firms regardless of age, clearer guidance on employers’ SQE responsibilities, and regional training consortia.
- Client accounts and regulation: drop the Interest on Lawyers’ Client Accounts (ILCA) scheme, require SRA impact assessments for small firms, and simplify audits below set size thresholds.
- Payments: confirm small law firms are within forthcoming late payment legislation and enforce 30-day public sector payment terms.
- Technology: support and an enhanced tax deduction for approved software, cloud services and AI tools, plus practical SRA guidance on AI.
- Access to justice: a community legal hub pilot in five areas with little local legal advice.
Why is recruitment the biggest problem for small law firms?
Public funding for Level 7 solicitor apprenticeships is now limited by age, which the Society says shuts out career changers and adds uncertainty for small firms planning several years of training. The move to the SQE has also left smaller employers, often without an HR team, unsure of their responsibilities when they take on candidates who have not finished their assessments.
Until anything changes, the cost of hiring and training sits with the firm. A new fee earner usually costs money for months before their billing covers their salary. Recruitment and training finance can spread that cost, and working capital covers the wider gap while new work builds.
What is the client account interest scheme, and how would it affect your firm?
The Ministry of Justice consulted in January 2026 on an ILCA scheme. Its proposal would send to government 75% of the interest earned on pooled client accounts and 50% on individual (designated) client accounts, and could also cover Third Party Managed Accounts (MoJ consultation, PDF). No start date has been set, and the manifesto asks for it to be dropped.
Where a firm currently keeps part of the interest earned on its client account, the scheme would reduce that income. Firms that rely on it to help cover overheads should model their finances without it, and review how much working capital they would need to replace it.
Late payment, lock-up and technology
The call to bring law firms within late payment legislation reflects how much of a small firm’s cash sits in unbilled work and unpaid bills. Our guide to reducing lock-up sets out practical steps, and WIP finance and aged debt and lock-up finance release cash tied up in work in progress and unpaid fees. Our guide to WIP finance for law firms explains what WIP is and how lenders look at it.
On technology, a tax deduction would help only once it exists. Firms upgrading case management, cloud systems or cyber security now can spread the cost with IT and software finance.
What does it mean for your firm’s funding, and what should you do next?
The manifesto is a set of asks, not a change in the law. The costs that are certain this year, such as October’s practising certificate fees and professional indemnity renewals covered in our news on SRA fees and PII for 2026/27, still need funding on today’s timetable.
- Cost any hires for the next 12 months, including the months before they bill.
- Model your income without client account interest.
- Measure your lock-up and set a target to reduce it.
- Line up funding before you commit, not after.
Starting out or planning a sale? Our guides on how to start a law firm and how much a law firm is worth may help. We search the market across 300+ lenders and approach those that understand solicitors and law firms. Instant Quotes shows your matches in minutes, with no credit check.
Common questions
What is the Law Society’s small firm manifesto?
A set of policy asks published on 13 October 2026 for small firms and sole practitioners in England and Wales, covering recruitment, client account interest, audits, late payment, technology and access to justice.
What is the ILCA scheme?
The Interest on Lawyers’ Client Accounts scheme is a Ministry of Justice proposal, consulted on in January 2026, under which 75% of interest on pooled client accounts and 50% on individual client accounts would go to government. It is not yet in force.
What are the financing options for law firms?
Common options include WIP finance, disbursement finance, working capital, PII premium finance, practising certificate finance and loans for buying a firm or a partner buy-in, subject to status and lender criteria.
Does checking my options affect my credit file?
No. Instant Quotes involves no credit search. A lender only runs its own checks, with your permission, if you choose to apply.
Official sources
Published 19 October 2026. Figures and dates are taken from the sources named and were correct on that date. This article is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.
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