Solicitors Accounts is the FLK2 subject candidates love to leave until last, and then quietly panic about. There's no rich case law to enjoy, no doctrine to argue. Just a set of rules about whose money sits in which bank account, and a marking scheme that doesn't care how clever you are if you put a credit in the wrong column. The good news? Once it clicks, Accounts is one of the most scoreable areas in the whole of SQE1. The logic is mechanical. Master the handful of core ideas and you can bank marks while other subjects make you sweat.
Let me walk you through the bits that actually trip people up โ client money, mixed receipts, and disbursements โ the way I'd explain them to a colleague the week before the exam.
Why client money is the whole game
Strip everything back and the SRA Accounts Rules exist to protect one thing: money that belongs to someone other than the firm. That's it. Every rule, every ledger entry, every double-entry headache flows from a single principle โ client money must be kept separate from the firm's own money, and must be available to the client on demand.
So your first reflex on any Accounts question should be a question of your own: whose money is this? If it's the client's, it belongs in the client account and gets recorded on the client side of the ledger. If it's the firm's โ fees you've billed, money the client owes you โ it belongs in the business account. Confuse the two and you've not just lost a mark; in real practice you've breached the rules.
Client money, broadly, is money the firm holds or receives that relates to:
- money held or received for a client, or for a third party, in the course of regulated services;
- money held on account of costs or disbursements not yet billed;
- money held as trustee or in another fiduciary capacity;
- money received in respect of fees and unpaid disbursements before the firm has delivered a bill.
That last one is where the wheels come off for a lot of candidates, so hold that thought โ we'll come back to it under mixed receipts.
The two accounts you're always reasoning about
Picture two buckets. The client account holds client money. The business account (sometimes called the office account) holds the firm's own money. Every transaction you're asked about is really a question of which bucket the money should be in, and how you record the movement.
In double-entry terms, each side has two columns โ a debit (DR) and a credit (CR). Money in is a credit to the relevant ledger; money out is a debit. The cash sheet mirrors the ledger entry on the opposite side. None of this is hard. It just rewards being neat and consistent, which under exam pressure is easier said than done.
Mixed receipts: one cheque, two destinations
Here's the scenario examiners adore. A client sends you a single payment that contains both client money and the firm's money. Maybe it's settlement of your bill plus money on account of future work. Maybe it's a completion payment that includes your costs. One cheque, one bank transfer โ but two different owners hiding inside it.
This is a mixed receipt, and the rules give you a choice about how to deal with it.
- Split the payment. Pay the client-money portion straight into the client account and the business-money portion straight into the business account. Clean, immediate, no risk.
- Bank it all into the client account first, then promptly transfer the business-money element out to the business account.
What you must not do is bank the whole thing into the business account and leave the client's money sitting there. The default protective instinct is always: when in doubt, the client account is the safer home, because client money in the business account is a breach, whereas business money briefly in the client account (then promptly moved) is tolerated.
The single most useful habit in Accounts: before you touch a ledger, name the owner of every pound in front of you. Get the ownership right and the entries almost write themselves.
One nuance worth nailing. Money received for your firm's costs becomes business money only once you've delivered a bill. Receive it before billing, and it's client money โ into the client account it goes. This timing point is quietly examined again and again, because it forces you to track two facts at once: what the money is for, and whether a bill has been raised yet.
A worked example
Let's make it concrete. You act for Priya in a commercial dispute. On 14 May she transfers ยฃ6,000 to your firm. Of that, ยฃ2,000 is settlement of a bill you delivered to her last week; the remaining ยฃ4,000 is money on account of further work you haven't started.
Reason it through:
- The ยฃ2,000 relates to a delivered bill โ it's the firm's money. Business account.
- The ยฃ4,000 is on account of future, unbilled work โ it's client money. Client account.
Acceptable approach one: pay ยฃ2,000 into business and ยฃ4,000 into client, simultaneously. Acceptable approach two: bank the full ยฃ6,000 into the client account, then promptly transfer ยฃ2,000 to business. Both are compliant. Now flip one fact โ say no bill had been delivered for that ยฃ2,000 yet. The whole ยฃ6,000 is client money, and any attempt to route part of it into business would be a breach. Same numbers, completely different answer. That's the examiner's favourite lever.
Disbursements: the distinction that decides the entry
"Disbursement" just means a payment the firm makes to a third party on the client's matter โ court fees, counsel's fees, search fees, expert reports, Land Registry charges. Simple enough as a word. The trouble is that how you record paying a disbursement depends on a distinction candidates routinely fudge.
The question to ask: are you paying this out of money the client has already given you, or are you paying it out of the firm's own pocket and recovering it later?
Paying from client money held
If you're holding enough of the client's money in the client account to cover the disbursement, you can pay it from there โ provided the money is properly available for that purpose. You debit the client ledger and the client cash account. Done.
Paying from the firm's own money
If you pay a disbursement out of the business account โ the firm fronting the cost โ that's a business-account transaction recorded on the business side. You'll recover it from the client later, typically on the bill. The trap here is candidates who instinctively reach for the client ledger because the word "disbursement" makes them think "client". Owner of the money first, always.
The VAT wrinkle
Disbursements and VAT generate a disproportionate share of Accounts errors. Whether VAT is charged, and on whom, depends on the nature of the payment and the agency analysis behind it. For SQE1 purposes, don't try to memorise every permutation โ understand the principle that VAT follows the supply, and that some third-party payments are treated as the firm's own expense (VAT recoverable by the firm) while others are genuine agency disbursements passed through to the client. Then drill the patterns with practice questions until the common fact patterns feel familiar. This is exactly the sort of topic where repetition beats theory.
Interest, shortfalls and the rules people forget
Three smaller areas show up often enough to be worth a deliberate pass.
Interest on client money. A firm must account to the client for a fair sum of interest on client money it holds, where it's fair and reasonable to do so. Note the framing โ it's a fairness standard, not a fixed rate you need to recite. Don't go looking for a magic percentage in the question; look for whether accounting for interest is fair given the amount and the length of time held.
Shortfalls and breaches. If client money goes missing from the client account, or the client account is overdrawn, the firm must promptly replace the shortfall using its own money. Promptly. The rules don't give you a leisurely window. In a question, spotting a breach and identifying the required corrective step is often where the marks sit.
Withdrawals from client account. You can only withdraw client money for the purpose for which it's held, or as otherwise permitted, and only up to the amount held for that client. You cannot use Client A's money to fund Client B's transaction. Each client's money is ring-fenced even though it sits in one pooled account. That last point โ pooled account, separate ledgers โ confuses a lot of people who picture a separate bank account per client. There isn't one. The separation is in the bookkeeping.
How to actually revise this for FLK2
Solicitors Accounts is one of the six FLK2 subjects, sitting alongside Property Practice, Wills and the Administration of Estates, Land Law, Trusts, and Criminal Law and Practice. In the assessment it's woven into 180 single-best-answer questions across that paper โ and remember FLK2 is a separate sitting from FLK1, each running across two sessions of 2 hours 33 minutes. So Accounts questions arrive mixed in with everything else, often disguised as Property or Wills problems where the real test is whether you can post the right entry.
A few tactics that genuinely move the needle:
- Build muscle memory, not understanding alone. You can understand the rules perfectly and still fumble a ledger under time pressure. The fix is volume โ dozens of worked entries until "money in equals credit the client ledger" is automatic.
- Always state the owner before you post. Write "client money" or "business money" in the margin of your scratch paper. It sounds trivial. It prevents your single most expensive error.
- Drill the timing of bills. The pre-bill versus post-bill distinction for costs is examined relentlessly. Make sure you can switch your answer the instant the facts mention (or omit) a delivered bill.
- Practise mixed receipts cold. If you can split a messy completion payment into its client and business elements without hesitating, you're ahead of most candidates.
This is precisely the kind of topic where a good question bank earns its keep. Reading the rules gets you maybe 40% of the way; the rest is pattern recognition you can only build by doing question after question. The Ant Law SQE Question Bank tags Accounts questions by sub-topic, so you can hammer mixed receipts on Monday and disbursements on Tuesday rather than meeting them randomly. Its smart practice engine pushes the ones you got wrong back in front of you, which for a mechanical subject like Accounts is exactly the spaced repetition you want.
Where Accounts fits in the bigger qualification picture
Step back for a second. Passing FLK1 and FLK2 is one component of becoming a solicitor in England and Wales. The full route to solicitor qualification also requires a qualifying degree or equivalent, two years of Qualifying Work Experience (QWE), and meeting the SRA's character and suitability requirements. SQE2 then tests five practical legal skills โ Client Interviewing, Advocacy, Case and Matter Analysis, Legal Research, and Legal Writing and Drafting โ through oral and written tasks rather than multiple choice.
Why mention all that in an Accounts article? Because candidates who treat Accounts as a box-ticking nuisance miss the point. The discipline you build here โ naming the owner of every pound, handling client money with scrupulous care โ is the foundation of the trust a solicitor holds. It carries straight through into your QWE and into practice. Get sloppy with client money in the real world and you don't just fail an exam; you risk your whole career. The rules feel pedantic precisely because the stakes are high.
As for pass rates โ they vary between sittings, and FLK2 has historically been the tougher of the two papers for many candidates, with Accounts contributing its share of dropped marks. Rather than fixate on a percentage, check the latest published figures on sqe.sra.org.uk and read them as trends, not destiny. And while you're there, treat the SRA site as your single source of truth for anything time-sensitive: booking windows, sitting dates and fees all change, so verify them directly rather than trusting anything you half-remember.
A quick self-test before you move on
Try this without notes. Your firm receives ยฃ900 from a client, made up of ยฃ400 for a bill you delivered yesterday and ยฃ500 on account of a court fee you've yet to pay. Where does each portion go, and what's the safe way to bank it?
If you answered: ยฃ400 is business money (delivered bill), ยฃ500 is client money (held for a future disbursement, unbilled), and the cautious route is to bank the lot into client then transfer the ยฃ400 promptly to business โ you've got the core of this subject. If you hesitated on the ยฃ500, that's your signal to do more reps before exam day.
Solicitors Accounts rewards the candidate who's calm, neat and mechanical. Build the habit of identifying the owner of the money first, drill the mixed-receipt and disbursement patterns until they're second nature, and this becomes a part of FLK2 you can rely on rather than dread.
Ready to put it into practice? Spin up a focused Accounts set on the Ant Law SQE Question Bank at antlaw.ai, post the entries for twenty mixed-receipt questions back to back, and watch how quickly the logic stops feeling slippery. That's the kind of hands-on FLK1/FLK2 practice that turns Accounts from a worry into a banker.