By Legal Futures Associate Recovery First
A national law firm was recently forced into administration due to the burden of having to repay their covid loans.
Many businesses took out government-backed loans, such as the Bounce Back Loans Scheme (BBLs) and the Coronavirus Large Business Interruption Loan scheme, to help them through the Covid-19 crisis. Although the government has provided some flexibility for bounce-back loan repayment, such as repayment holidays, many businesses, including law firms, continue to struggle with the monthly repayments.
Youngs Law, which recently went into administration, attributed their closure to a combination of high staffing costs and their inability to repay loans which they had taken out during the pandemic.
How can the Recovery First model assist firms with covid loan repayment?
Recovery First offers a range of solutions to help law firms facing financial difficulties and struggling with the repayment of covid loans.
One route a firm may choose to take to improve their cash flow is to exit a non-profitable market and focus on more profitable areas of law. Firms may also wish to consider selling or closing the business completely. Another option may be to restructure or merge with another law firm.
Whichever route a firm decides to take, we can assist. Recovery First will ensure the most profitable outcome is achieved.
We offer a positive solution to any law firm by helping them exit any legal market whilst remaining solvent, maintaining cash flow, and ensuring they get the most out of their files.
As well as assisting firms who are going through restructuring, we also assist many firms who are going through the formal insolvency process. We work alongside the insolvency team to come up with the right plan tailored to meet the needs of each specific firm.
An additional benefit is that the firm’s clients not only get a seamless transfer, but they are also married up with a firm specialised in their particular needs.
How the Recovery First model ensures fairness in costs recovery
The Recovery First model is structured to ensure that all parties’ interests are aligned with the collection of costs over the entire project lifecycle.
- No upfront fees – We handle transfer structuring, legal agreements, data transfer, and physical file movement at no initial cost.
- Ongoing monitoring & management – Our panel firms manage files to completion (often for many years).
- Cost negotiation & collection – We expertly handle the negotiation and collection of costs, ensuring maximum recovery.
- Fair cost allocation – We manage the allocation of costs to ensure they are allocated fairly in line with the terms agreed at the outset between the exiting firm and the panel firms regardless of how long that takes to achieve, including managing the payment of disbursements.
- Transparent accounting – We report to all parties openly and only charge fees as a percentage of costs recovered for the original firm.
- Success-based fees – Fees are only charged when costs are successfully recovered. If no costs are collected, we don’t charge.
We believe that this is a fair and equitable solution and ensures that everyone’s interests are aligned – we all get paid, or none of us. Recovery First’s alignment with the selling firm ensures their position is monitored and protected for however long it takes to bring the project to a conclusion. Projects run for several years and the seller’s interests are policed for the duration.
Contact Recovery First
The unique scheme offered by Recovery First is suitable for law firms and professional advisors, including restructuring and insolvency solicitors, insolvency practitioners, and accountants. Our team manages the transfer of files from start to finish, placing case files with an approved law firm so as to protect the integrity of the client’s case.
We will provide you with all the advice and support you need, and we guarantee 100% confidentiality for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch today with David Johnstone via email at david.johnstone@recoveryfirst.co.uk, telephone 07887796989 or contact Sally Dunscombe at sally.dunscombe@recoveryfirst.co.uk, telephone 07774205870.
