Why law firms are partnering with alternative financial institutions

Picture this: a time-sensitive deal worth millions, clients expecting immediate action and a banking system that moves at the speed of molasses. For law firms today, this scenario is more than just frustrating – it's a competitive disadvantage. 

Across the legal industry, firms are hitting the same wall when it comes to traditional banking. Whether handling escrow for a property transaction, managing litigation finance or dealing with complex international settlements, legacy financial systems simply aren’t built for how modern law firms actually work. 

That's where alternative financial institutions come in – and they're quietly revolutionising how legal professionals handle money. 

Important: The information in this guide is general in nature, not legally binding, and should not be considered financial or investment advice.   

Key takeaways: 

• Law firms face delays and limitations when using legacy banking systems for escrow, client money, and cross-border matters. 

• From multi-currency escrow to milestone-based disbursements, alternative banks deliver services tailored to legal use cases. 

• Digital KYC, real-time monitoring and legal-ready reporting simplify compliance without compromising speed or standards. 

• Law firms that adopt modern financial tools can improve client service, reduce delays and unlock new opportunities. 

  
  

Why traditional banks face challenges with specialised legal work 

Traditional banks excel at serving the vast majority of their customers with robust, time-tested systems. But the specialised needs of legal work in 2024 present unique challenges that weren't anticipated when many of these systems were originally designed. 

More than half of law firms surveyed recently reported growth rates varying from 5% to 20%, but this growth is creating new operational requirements that stretch beyond traditional banking frameworks.

Complex onboarding requirements 

Opening accounts for clients from emerging markets or with intricate corporate structures can take weeks or months due to enhanced due diligence requirements. Whilst these thorough processes serve important compliance purposes, they can create timing challenges for law firms working on time-sensitive matters. 

Specialised operational needs 

Banks typically serve law firms using the same frameworks they use for other professional services businesses. However, legal work often requires unique capabilities like conditional fund holding, case-by-case money separation, and milestone-based payment releases—features that fall outside standard banking offerings. 

Multi-jurisdictional complexity 

Cross-border legal matters involve currency considerations, varying correspondent banking relationships, and different KYC requirements across jurisdictions. Whilst banks maintain strong compliance standards, these necessary protocols can create operational friction for complex international transactions. 

The numbers reflect these challenges: in one recent survey, an estimated 45% of global law firms reported significant difficulties opening bank accounts for client transactions in 2023, particularly for high-risk or cross-border scenarios. 

What alternative providers do differently 

Alternative financial institutions are digital-native regulated entities that were built from the ground up for businesses that need more than basic banking.  

Here's what sets them apart: 

• Speed without compromise: Alternative banks can onboard new accounts in days rather than months, using automated KYC processes that are faster than manual reviews while maintaining the same compliance standards. 

• Legal-specific features: Multi-currency accounts, escrow functionality, conditional payment releases, API integrations with case management systems – these aren't add-ons: they're core features. 

• Global by design: Rather than bolting on international capabilities, alternative providers are built to handle cross-border transactions seamlessly from day one. 

  
  

AI investments in banking and financial services are expected to rise by $31 billion worldwide by 2025, and alternative providers are at the forefront of this technological shift. According to industry reports, over 60% of legal intermediaries working in international transactions now rely on alternative banks for parts of their payment or account needs. 

Better support for how lawyers actually work 

The best alternative providers offer more than accounts: they provider tailored services designed to support real-world legal workflows. We recommend looking for solutions that offer these services: 

• Client money management: Third-party managed account arrangements that automatically maintain the separation required by legal ethics rules, with built-in reporting to prove compliance. 

• Escrow made simple: Whether it's real estate, M&A or private wealth transfers, alternative banks can structure accounts that release funds automatically when conditions are met or hold them securely until manual release is authorised. 

• Litigation finance support: Conditional release terms that align with litigation milestones, so funds can be held securely until cases reach specific stages. 

• Granular fund management: Separate money by case, client or jurisdiction automatically, with reporting that satisfies both fiduciary requirements and audit needs. 

  
  

When your professional obligations require absolute clarity about whose money is where (and why), generic banking tools can sometimes create risk, rather than managing it. Opting for a tailored alternative can make it much easier to keep track of client funds, leaving you free to concentrate on other matters. 

Compliance that simply works 

Alternative providers stand out because they make compliance a feature, rather than a burden. One of the key challenges in 2025 and beyond for financial services firms is the evolving risk compliance environment – but alternative banks are designed to handle this complexity. 

Instead of slow, manual processes, modern alternative providers offer: 

• Automated onboarding: Digital KYC and AML checks that happen in real-time, with human oversight for complex cases. 

• Live monitoring: Real-time transaction monitoring with intelligent alerts that flag genuine risks without creating noise. 

• Dedicated support: Account managers who understand legal compliance requirements and can guide firms through regulatory obligations proactively. 

• Audit-ready records: Exportable audit trails designed specifically for legal disclosures and financial reporting requirements. 

  
  

With global compliance fines reaching $6.6 billion in 2023 alone, compliance isn't something you can bolt on afterwards. Thankfully, alternative banking institutions build it into every transaction from the start.

Looking at the bigger picture 

The rise of alternative financial institutions reflects something larger happening in professional services. Law firms are grappling with several challenges in 2025, including finding ways to optimise operational efficiency, and financial infrastructure is becoming a competitive advantage rather than just a necessary evil. 

Forward-thinking firms are discovering that alternative providers do more than just solve banking problems: they enable better client service. When you can set up escrow accounts in days rather than months, process international payments without friction and provide real-time reporting on fund status, you're more efficient – and more valuable to your clients. 

To learn more about Interpolitan TPMA accounts and how we work with a range of intermediaries, including law firms and advisors, get in touch today.