PM Law collapse to cost the profession £30m as SRA Compensation Fund contributions soar

The collapse of Sheffield-based PM Law is set to cost the profession around £30m through the SRA Compensation Fund, and it is one of the main reasons every practising solicitor in England and Wales is facing a sharply higher bill this autumn.

The Solicitors Regulation Authority (SRA) wants to raise £46.3m for the fund in 2026-27 — a £20.3m increase on the current year, or 78% more. It is a striking number for a fund that exists as a backstop of last resort rather than a routine cost of practice.

What the PM Law collapse actually cost

PM Law, the trading name associated with the Proddow Mackay business, closed unexpectedly in February 2026. The SRA has said the closure contributed to a significant increase in applications to the fund, with the total value of applications expected to reach £30m.

The run rate has been rapid. A month after the closure, the regulator had already paid out £9.3m to clients of PM Law: £5.6m from the statutory trust — the mechanism by which the SRA holds money that was in a firm's client account at the point of intervention — and £3.7m from the compensation fund itself.

By April the figure had reached £16m, split £9.3m from the fund and £6.8m from the statutory trust. At that stage the regulator indicated that close to £40m of client money appeared to be missing in total.

The intervention has also drawn in connected names familiar to anyone who followed the firm's expansion, including WB Pennine Solicitors and Butterworths Solicitors. For clients caught up in it, the practical question was always the same: what happened to money that should have been held by the firm on their behalf, and who makes good the shortfall.

Why individual solicitors are paying most of the increase

The SRA is not simply raising the total. It also wants to change how the bill is divided.

Since 2010 the demand has been split equally between individuals and firms. The regulator has asked the Legal Services Board (LSB) to approve a 70:30 split in favour of individuals paying the larger share.

Subject to LSB approval, that means:

• individual contributions rising 143%, from £70 to £170
• firm contributions rising 11%, from £1,950 to £2,170

Under a continued 50:50 approach, the figures would have been £120 for individuals and £3,600 for firms. In other words, the rebalancing takes roughly £1,430 per firm and spreads it across the individual solicitor population.

The SRA's argument is demographic. The number of practising individuals has grown while the number of firms has fallen since the 50:50 split was set, so the old ratio no longer reflects the shape of the profession. In its application to the LSB, the regulator conceded it does not have a clear picture of all the equality impacts, 'especially about those individuals who pay their own contributions', but said the change 'marks a positive change that will help mitigate known disproportionate impacts on smaller firms'.

That last point is the one worth pausing on. A small high street law firm with two or three fee earners has been carrying the same firm-level charge as a large practice, and for those firms the flat contribution has been a real burden. Shifting weight onto individuals genuinely helps them. It also lands hardest on solicitors who pay their own contributions out of their own pocket — typically the self-employed, consultants and those between roles, who are not obviously better placed to absorb a 143% rise.

Interventions are up, and so are the costs of running them

PM Law is not the only pressure. The LSB application points to an increase in the number of interventions and in the cost of administering them, including storage of files and records.

In the eight months from November 2025 to June 2026, the SRA carried out 45 interventions. That compares with 42 across the whole of the previous financial year. Even allowing for lumpy timing, the direction is clear.

The Axiom Ince shadow

The fund is still absorbing the aftermath of Axiom Ince, which is set to cost around £39m in total, most of which has now been paid.

The SRA's modelling deliberately excludes 'exceptionally large' interventions such as Axiom Ince from its forecasting, and it says PM Law does not change that policy. Its cashflow modelling combines case-by-case forecasts for known claims with long-term averages drawn from six years of historical data, 'ensuring that projections reflect typical operational experience rather than anomalous events'.

The regulator also stresses that it is still pursuing cost recovery in the Axiom Ince intervention, so it would not treat that case as unrecoverable — while acknowledging that recoveries could take years and would then feed into future contribution levels.

Reintroducing the previously excluded Axiom Ince costs would add another £20m or more to contributions. That is the number that puts this year's increase in perspective.

On PM Law, the SRA's conclusion is that the episode showed the fund 'held a sufficient contingency reserve, ensuring demand on claims can be met, despite the scale of claims generated'.

High-volume consumer claims are not the threat here

Despite the concerns the SRA has raised about high-volume consumer claims models, it does not expect them to hit the fund significantly. The fund only makes grants where there has been dishonesty or a failure to account for money held, and no other route to recovery exists. The regulator says it will keep the position under review.

More ambitious reform — such as setting contributions by reference to the risk or impact profile of each firm — has been shelved. Given 'competing, more pressing, priorities', the SRA says it does not expect to look at risk-based contributions in the coming year either.

Our view

Risk-based contributions are exactly the reform this moment calls for, and pushing them back another year is the least defensible part of the application. The fund is currently a flat levy in which a conveyancing-heavy practice holding large sums in client account contributes at the same rate as a firm that never touches client money at all. That is not insurance; it is a subscription.

The wider bill is what will sting. With practising fees also climbing, the Law Society and SRA are set to collect around £224m from solicitors for the practising year beginning in November — roughly £50m more than the current year.

Solicitors will pay it, because the alternative is a profession whose clients cannot be made whole when a firm fails. But the profession is entitled to ask what the regulator is doing to reduce the frequency of £30m failures, not merely to fund them after the fact.