Jurisdiction(s):
United Kingdom

Related legal acts

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...

Managing residual client balances under the SRA Accounts Rules 2019: prompt return, £500 charity route, authorisation, records and breach reporting (England and Wales)

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Practice notes

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This Practice Note summarises the requirements of the sra accounts rules 2019, in force from 25 November 2019, concerning residual balances. It also mirrors the SRA’s mandatory Statement on the prescribed circumstances in which you may withdraw client money from a client account to donate to a charity of your choosing. See also Practice Note: How to manage a residual balances project. Suggested procedures for dealing with residual balances are outlined in the following Precedents: Accounts manual for accounts or finance team—law firms; and Accounts manual for staff—law firms. See also Precedents: Residual balance record; Residual balances register; Residual balance—monitoring review.

What is a residual balance?

Firms commonly hold funds for clients—this is client money (see below: Definition of client money). Typically, client money is used in delivering the matter or returned to the client. However, this does not always occur and, in some cases, funds remain where the client is untraceable or it has not been possible to return the money. This remaining amount is a residual balance. Residual balances can arise for a variety of reasons, including:

balances...

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Web page updated on 21/05/2026

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