How third-party managed accounts reduce risk and build trust at home and abroad
- Daniel Dunne
- Jun 30
- 6 min read
My first exposure to third-party managed accounts came several years ago, during my early days in the payments industry at WorldPay. At the time, I spent my days helping clients solve complex cross-border payment challenges, and that problem-solving mindset has driven my career ever since. In the last several years, for instance, I've shifted my focus to law firms, working to understand their unique needs and transactional pain points.
What I've discovered is that legal professionals often find themselves asking critical questions at the end of complex deals: "How do we distribute these funds efficiently?" or "What's the best mechanism for this complicated scenario?" This is precisely why I encourage law firms to involve payment specialists like us earlier in the conversation – at the start of a transaction, rather than the end – so we can be part of the process from day one.
My experience, which spans both the broader payments world and the legal sector, has made me uniquely able to sit with clients, understand their challenges, and offer tailored, practical solutions that align with the way in which their businesses operate – and that’s what I’ll talk about in this article.
TPMAs are more than just “mini escrow” arrangements
One of the most persistent misconceptions I encounter is the belief that a third-party managed account, or TPMA, is simply a "mini escrow." While both involve verification, holding funds and disbursement, that's where the similarities end.
An escrow account is typically a one-off arrangement in which funds are held under specific legal agreements with defined release conditions. These funds remain relatively static for several months until specific release conditions are met, at which point they're disbursed and the account typically closes. That’s the end of that, so to speak.
In contrast, a TPMA is operational and transactional in nature. It remains open with a continuous flow of funds in and out, supporting the day-to-day needs of a transaction or matter. For example, a TPMA might send regular milestone payments throughout a multi-year construction project, basically providing ongoing financial infrastructure rather than a single-purpose holding mechanism.
You can open a TPMA, keep clients funds at arm's length and maintain your account for months or even years, reducing risk and clarifying client questions about funding processes at the same time.
Busting third-party managed account myths
Beyond the escrow conflation, several other misconceptions about TPMAs persist in the market. One frequent concern is that TPMAs are slow or lack multi-currency capabilities – but this just isn't accurate. For instance, Interpolitan Money operates in more than 50 currencies and can process payments to around 160 jurisdictions, making the firm more than capable of supporting high-value cross-border transactions.
Other common worries relate to security and transparency. However, modern TPMA platforms provide comprehensive audit trails, security authorisations and permissions for all transactions, plus clear engagement documentation and complete visibility into fund management. At Interpolitan, for example, all funds are held in safeguarded, insolvency-protected accounts with tier-one banking partners for complete peace of mind.
Cost concerns also surface regularly, with some law firm partners assuming TPMAs are prohibitively expensive. Again, this isn’t true. Our priority remains serving clients effectively, and we're actively working to develop fair pricing models that enable scalability for our clients, ensuring robust compliance and functionality without pricing law firms out of using these essential tools.
Finally, there's a fundamental misconception about the role of law firms themselves. Clients sometimes assume that legal professionals can also act as banks, handling ongoing payments and account management. But law firms exist to provide legal services – not to operate as financial institutions. This disconnect can create real challenges when clients request changes to payment mechanisms or leave firms holding residual balances. Thankfully, TPMAs offer a clear solution by handling the operational financial elements while keeping legal professionals focused on their core expertise.
For law firms, TPMAs provide a clear answer to the Solicitors Regulation Authority (SRA) rule 3.3 conundrum, allowing them to support client transactions without crossing the line into regulated banking activity. Indeed, when the SRA’s updated Account Rules came into force in November 2019, rule 11 was introduced to clarify how firms could outsource the management of client funds to third-party providers. By using a TPMA, these firms would effectively no longer hold or receive client money.
Shaping the future of client money handling
Not long ago, the SRA began a consultation to develop better and more collaborative processes to protect client funds. The consultation, which concluded in February 2025, brought together law firms, third-party providers like Interpolitan Money and legal professionals to explore how client money should be handled going forward.
Those participating in the consultation explored several important topics, including operational efficiency and security standards as well how to best use TPMAs to safeguard client funds.
During the consultation, I observed some concerning friction, particularly when certain payment providers took an adversarial stance with law firms, claiming they could handle payments better than the legal professionals themselves. This approach isn't productive and misses the fundamental point: many law firms are highly capable of managing complex cross-border transactions.
Although we’re still waiting for the SRA’s final findings and proposals, the process clearly revealed the importance of cooperation between legal professionals and financial service providers. On a personal level, I found talking with stakeholders across the financial and legal sectors illuminating.
In my view, the key to success lies in collaboration: in other words, working alongside law firms to offer solutions that deliver what clients want and regulators insist upon. It will be interesting to see if, and how, SRA guidelines and rules change in response to the consultation.
TPMAs are essential infrastructure, and here’s why
Between SRA rules and ongoing payment challenges, TPMAs are here to stay. Really, they’ve evolved because of the need to protect client funds in an increasingly global business environment. Modern transactions are much more complex than they were just a few years ago, creating a greater need for tools that support domestic cross-border activity while reducing the risks associated with holding client funds.
Meanwhile, regulatory scrutiny has become particularly intense in large part because of high-profile cases like the Axiom Ince scandal, where approximately £60 million in client money was misused to acquire businesses, representing an enormous breach of trust and regulation.
Clearly, robust safeguarding mechanisms are no longer optional. It’s hardly surprising, then, that TPMAs have moved from being a niche tool to essential infrastructure for mitigating risk, offering the transparency, auditability and compliance that modern regulations demand.
Real-world scenarios where TPMAs add value
TPMAs prove their worth across various scenarios, but certain use cases really highlight their advantages. In construction projects, for instance, there's always a risk of fund misappropriation or supply chain breakdowns. With a TPMA acting as a trusted intermediary, funds stay protected in the event of project delays or issues, rather than with a main contractor, reassuring everyone in the chain.
Litigation is another compelling application. For example, in data breach or PPI claims, law firms often manage large claimant books; by opening a TPMA, they can collect settlement funds into a central account and distribute them efficiently – even to overseas claimants. Because it's an operational account, it remains open for the full duration of the case, offering security and flexibility throughout.
I was recently involved in an especially complex example: a law firm processing a litigation claim involving 200,000 claimants without the ability to take receipt of the funds and the infrastructure to disburse money to the claimants. This is a great example of a scenario in which a TPMA is vital.
What makes a world-class TPMA provider?
When choosing a TPMA provider, it’s worth thinking carefully about who can genuinely meet the practical and regulatory demands of modern transactions. At the very least, a provider must be able to address every concern raised in the SRA consultation and beyond. The service should be cost-effective, secure, fully compliant and able to handle high-value, complex, multi-jurisdictional transactions.
Functionality and scalability – plus complete operational and reporting transparency – are also non-negotiable. But perhaps most importantly, a world-class provider must be able to collaborate properly with legal professionals. The market will only embrace these solutions if we build them together, respecting the expertise that law firms bring while complementing it with specialised financial infrastructure.
I'd also advise looking for a provider that offers comprehensive audit trails, multi-currency capabilities, global reach and robust security measures, including insolvency protection. It should also maintain open communication throughout the relationship.
At Interpolitan, we supply the full package expected of a top-tier TPMA provider. Built with input from legal professionals, our platform combines strong regulatory expertise with advanced fintech capabilities. We support more than 50 currencies, offer full insolvency protection and provide clear, compliant audit trails.
Designed for complicated, large-scale transactions, our TPMAs are practical, scalable solutions which give legal professionals full control and visibility. We're a trusted partner, rather than a replacement for legal judgment.
Looking forward
As complex transactions continue to develop and regulatory expectations intensify, TPMAs will only become more central to legal practice. In the end, the key to success lies in looking at third-party managed accounts as essential infrastructure. With a solid TPMA in place, you can focus on what you do best while ensuring client funds are handled with the highest standards of security, transparency, and compliance.
To explore how Interpolitan can support you with TPMA or escrow services, let’s set up a time to talk. Simply book a meeting with me to connect at a time that suits you.
Daniel Dunne is a thought leader in the payment space, with over a decade of experience structuring high-value, complex transactions. As Head of Legal Services at Interpolitan Money, he specialises in escrow, TPMA, and paying agent solutions, helping law firms, corporates, and investors move money securely, compliantly and without friction across borders.
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