By Legal Futures Associate Recovery First
In a recent article by Neil Rose at Legal Futures, it was highlighted that there has been a recent rise in law firms in England and Wales reporting financial problems to the Solicitors Regulation Authority (SRA). Some of the reasons for law firm financial difficulties included the current cost of living crisis, rising costs of professional indemnity insurance, deferred tax bills, the need to repay covid support to the government and cash flow issues caused by the removal of government covid support.
According to Sean Harkin from the SRA, it is not only small firms that are struggling financially, but firms of all sizes. He also discussed the fact that firms in a difficult financial position would have to seriously consider the future of their firms sooner rather than later. He stated;
“All we want is a positive outcome for each of their clients. If a firm does have to cease trading, what we’d want to see is a robust plan to protect clients’ best interests and to ensure there is an orderly wind-down of the practice.”
He further stated the importance of contacting the SRA for assistance as soon as possible to avoid the need for SRA intervention.
“It’s never worked against a firm to report problems to us. It’s far worse to wait until the last minute.”
SRA intervention
Under schedule 1 of the Solicitors Act 1974, the SRA has the power to intervene a law firm in certain situations. They will usually intervene to protect the interests of clients to the firm. If the SRA makes the decision to intervene, practising certificates may be suspended. Both client accounts and office accounts will be frozen, and all client money will be vested in the SRA. The firm being intervened will be liable for any costs incurred by the intervention agent.
One of the main reasons the SRA may intervene a law firm include concern over serious law firm financial difficulties.
Avoiding SRA intervention is essential to mitigating mounting debts against a firm. The best way to avoid SRA intervention is by acting early and addressing any underlying issues in an attempt to satisfy the SRA that intervention will not be required. In some cases, voluntary closure or restructuring of a firm may be required.
How Recovery First can help your firm avoid SRA intervention
Recovery First can assist firms facing financial difficulties in the process of restructuring or closing your firm in an orderly manner to avoid SRA intervention.
We also work alongside professional service providers, such as insolvency practitioners to discreetly sell a firm’s cases to multiple purchasers on their panel of solicitors. This mitigates the risks to the buying firms and results in a higher value for the work in progress (WIP) being recovered whilst ensuring SRA compliance.
The Recovery First team manage the transfer of files from start to finish, placing case files with an approved solicitor’s firm to protect the integrity of the client’s case.
Recovery First are an accountancy service provider that has built specialised software and processes to liquidate the full value a law firm has locked into WIP over time. They monitor case progression and conclusion in real-time and account back to their clients for the value realised on an agreed reporting period, either monthly or weekly, thereby de-risking a deferred deal from the seller’s perspective.
The Recovery First process is highly flexible, and they can also assist law firms directly in completing a compliant runoff, avoiding SRA intervention.
Recovery First’s services are suitable for all types of legal work, using a simple, ongoing process with no up-front costs.
Read our recent case study to find out how we helped provide a positive solution to a law firm facing financial difficulties, ensuring SRA intervention was avoided.
Why choose Recovery First?
Dealing with law firm financial difficulties can be a complex issue. Facing these issues as early as possible, and seeking the right help is key to ensuring the best solution is achieved.
Whichever route you choose to take for your firm, Recovery First will ensure the most positive and profitable outcome is achieved, ensuring SRA intervention is avoided.
We provide a seamless transfer of your firm’s cases, ensuring they are matched with a firm specialised in their particular needs.
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 with our Director, David Johnstone today via email (david.johnstone@recoveryfirst.co.uk), telephone 07887796989 or our Director, Sally Dunscombe via email (sally.dunscombe@recoveryfirst.co.uk), telephone 07774205870, and we will contact you to discuss the process.
