Jurisdiction(s):
United Kingdom

Key definition

Residual balance definition

What does Residual balance mean? In legal practice, a residual balance is unclaimed client money remaining in a firm’s client account after a matter has concluded, where the funds cannot be returned (for example, the client is untraceable or gives no instructions). The expression is descriptive rather than statutory; its treatment is governed by professional accounts rules (eg SRA Accounts Rules in England and Wales, Law Society of Scotland Accounts Rules, Law Society of Northern Ireland rules, and the Law Society of Ireland Solicitors Accounts Regulations). Typical causes include: - balances inherited on a merger or acquisition of files - client inaction (unpresented cheques, no instructions, deceased clients...

Residual Client Account Balances: COLP/COFA guide to SRA-compliant project triggers, triage, resolution and prevention (England and Wales)

Published by a LexisNexis Practice Compliance expert

Practice notes

At any one time, most practices carry a handful of aged, typically modest, residual balances tied to client matters within the firm. In the normal run of business, handling these residual balances ought to be straightforward, routine housekeeping. On occasion, though, the volume and spread of residual balances is such that a more substantial project is needed to bring them back under firm control.

This Practice Note explores practical questions that can confront the project sponsor, eg the COLP or COFA, when initiating a programme to address your firm’s residual balances. It sets out the circumstances that may prompt commencing a project, how best to start and organise the work, and offers pragmatic pointers designed to lighten the project sponsor’s workload considerably.

It should be read in conjunction with Practice Note: Residual balances—law firms.

In what circumstances will a residual balances project be required?

You may have undertaken a residual balance project...

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Sarah Mumford

Sarah Mumford has, consecutively, been Best Practice Partner at two commercial law firms (TLT LLP and Bevan Brittan LLP). In those roles, she was responsible for guidance, quality standards (ISO 9001 and 27001), compliance, risk, complaints, claims, practice governance and Stuff (from ‘mundane to merger’). She is a regular speaker at risk management events. Prior to moving into management, she was a commercial litigation solicitor. She has dealt with professional negligence (defendant and claimant) throughout her career but has also specialised at different times in insolvency, contentious construction law and professional conduct. Since September 2013 she has been running her own risk management consultancy for lawyers offering confidential advice, training, audit and guidance, working with firms from sole practitioner, to niche to Top 30 firms. As a consultant, she has been interim Director of Risk for varying periods, at Taylor Wessing,...

Web page updated on 22/05/2026

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