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Escrow and Third Party Managed Accounts
Escrow accounts make transactions possible by bridging the trust gap between buyer and seller. Funds are deposited into escrow and only released once agreed conditions are met, giving both parties certainty and security. Because solicitors are often central to commercial transactions, an escrow facility is frequently required to complete the deal safely.
Why not just use a client account?
At first glance, a solicitor’s client account looks like an escrow account. In property transactions, for example, the seller’s solicitor will hold funds before completion and only release them once the deal is finalised.
But the SRA makes it very clear: a client account cannot be used purely as an escrow facility. Providing banking services in this way is a regulatory breach, and the SRA treats it extremely seriously. If your firm is not acting directly on the legal transaction, you must use a third party escrow service or a TPMA.
What is a Third Party Managed Account (TPMA)?
A TPMA is essentially an outsourced client account. Instead of holding client money in your own bank account, a fully regulated third party holds it to your order. The SRA Accounts Rules do not apply to money held in a TPMA, making them a compliant and flexible option for law firms under the current Standards and Regulations.
Why use a TPMA?
Holding client money brings huge responsibility, significant administration and serious compliance risk. The Solicitors Disciplinary Tribunal regularly deals with breaches of the Accounts Rules, with outcomes ranging from fines to strike-offs. Firms must invest in proper systems, hire dedicated cashiers, and undergo annual audits — all of which takes time and resources for very little gain.
By outsourcing this function to a TPMA provider, your firm avoids these burdens and can concentrate on completing transactions for clients. The platform seamlessly manages the funds, giving you oversight without the day-to-day headaches.
Key benefits of TPMA
No SRA Accounts Rules compliance burden
Reduced regulatory and fraud risk
No need for costly cashiering resource or audits
Works for all types of legal transactions, including conveyancing
Significantly lower cost than running your own client account
Peace of mind knowing client money is managed safely and compliantly
Escrow Accounts vs. TPMAs – Key Differences
| Feature | Escrow Account | Third Party Managed Account (TPMA) |
| Purpose | One-off facility for a single transaction | Ongoing facility to manage client funds |
| Provider | Independent escrow agent | FCA-regulated TPMA provider |
| Duration | Short-term until agreed conditions are met | Long-term solution for regular use |
| Regulation | Subject to SRA restrictions | SRA Accounts Rules do not apply |
| Best For | Specific deals such as settlements, property, or M&A | Firms wanting to outsource client money handling permanently |
Costs
Both escrow accounts and TPMAs charge fees as a percentage of the funds handled. Escrow costs are usually built into individual transactions, while TPMAs typically represent a fraction of the cost of employing a legal cashier — making them a cost-effective alternative for most firms.
Why choose escrow accounts or TPMAs?
Security
Funds are protected until conditions are met.
Compliance
Avoid breaches of the SRA Accounts Rules
Trust
Transparency builds confidence between parties
Efficiency
Quick onboarding and reduced administration
Flexibility
Use escrow for one-off transactions or TPMAs for ongoing client money management
Want to remove the risk of handling client money while keeping transactions smooth and secure?
Contact us today to discuss whether an escrow account or TPMA is the right solution for your firm.
