Alliance Formed to Oppose Regulatory Overhaul
An newly formed alliance of SME and boutique law firms has formally mobilized to challenge the Solicitors Regulation Authority (SRA) over its upcoming mandate to separate the Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFA) roles. The SME & Boutique Law Firm Alliance, an independent collective representing smaller practices, argues that the current proposals—set to be phased in starting January 2027—are not grounded in sufficient evidence and could impose undue operational burdens on smaller firms.
The SRA’s rule change, approved by the Legal Services Board in August, requires firms with an annual turnover exceeding £600,000 or those holding more than £2 million in client money to ensure that these compliance roles are not held by individuals with “unilateral management control.” According to the Alliance, this forces a structural change that fails to account for the actual risk profile of smaller firms.
Concerns Over Evidence and Implementation
Jade Gani, founder of the Alliance and head of Circe Law, stated that there is a lack of evidence linking turnover thresholds to regulatory risk. Gani argues that exceeding £600,000 in turnover does not inherently transform a boutique firm into a large organization requiring complex governance structures. The Alliance plans to issue an open letter to SRA chief executive Sara Rapson, demanding clarity on how the £600,000 threshold was determined and requesting a pause on implementation while concerns are addressed.
Industry stakeholders suggest that the SRA’s proposal may be a reactionary measure following the independent review into PM Law, which highlighted failures in financial scrutiny and regulatory intelligence. However, critics like Peter Redmond, managing director at Clutton Cox, suggest that the regulator is attempting to shift the burden of its own institutional failings onto the profession. Redmond warned that forcing firms to hire external or junior staff simply to satisfy an administrative requirement could inadvertently increase consumer risk by placing compliance duties in the hands of unqualified candidates.
Potential Impact on Firm Growth
The financial impact of these changes is a primary concern for smaller practices. Kate Burt, CEO of HiveRisk, noted that while larger firms possess the management depth to absorb such structural shifts, smaller entities are already pausing strategic investments and growth plans due to uncertainty. The Alliance is also engaging with the Law Society, calling for the issue to be added to the agenda of the upcoming AGM on October 14, 2026, and threatening to force a special AGM if their concerns are not addressed.