SRA intervenes in two law firm groups made up of 12 firms

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Administration: Eight firms affected

The Solicitors Regulation Authority last week intervened in a group consisting of eight law firms after the primary business went into administration.

Law Direct Ltd went into administration on 20 June, according to the regulator, which separately intervened in another group of four firms which has a director in common with Law Direct.

Companies House records show that Law Direct changed its name from Blackstone Law Solicitors & Advocates a year ago, after Zaheer Afzal took control of the practice, then based in Leeds.

He is described as a barrister at Companies House. His co-director at Law Direct is solicitor John Irvine Burrowes but Mr Afzal is the only one listed as having ‘significant control’ of the business.

The other firms intervened in as a result of Law Direct’s administration are: Eton firm Geoffrey Bryant & Co, Brinley Morris Rees & Jones in Llanelli, Cardiff practice Ellison & Co, Davies Phillips (also known as Davies Ingram & Harvey) in Swansea, Birmingham firm Redfern & Co, Strain Kelville in central London, and Dakers Solicitors in Brighton.

Law Direct and some of the firms have little online presence; the SRA website says nine solicitors work at Law Direct, but confusingly the Law Society’s Find a Solicitor service says there are eight.

Meanwhile, the SRA also announced that it had intervened in West London firm Volks Hedley, also trading as Kirk & Partners in South-East London, Griffith Smith Conway in Hove and Beverley Davies Penny in Cardiff.

It did not give a reason beyond saying the move was necessary to protect clients and former clients.

The Law Society records say Mr Afzal is also a partner at Volks Hedley, alongside Chris Horsnell and Keith Rimmer, and list a total of seven solicitors at the practice.

Separately, research by accountants Lubbock Fine said the number of insolvencies of UK law firms rose a third from 46 to 61 in the year to 31 March.

“The last 12 months have seen a slowdown in demand for many law firms whilst they are struggling to deal with a substantial increase in overheads,” said partner Mark Turner.

“Sharp rises in the costs of energy, staffing and professional indemnity insurance have contributed to a significant growth in overall costs for many firms since before the pandemic.”

Broader stress in the economy was also causing even some previously prompt-paying clients to take longer to settle their bills, he added.

“This is exacerbating a long-standing late payments issue for law firms and creating a cash crunch for some… Even some law firms not previously touched by financial challenges are having to tighten their belts.”

Mr Turner said the 2023/2024 financial year presented “further crunch points” for law firms’ cash flow.

“For limited company law firms, corporation tax has risen this year to 25% from 19%, which will shrink the cash available to pay other bills.

“The cost of VAT is compounded by the fact that it must be generally paid on what was billed on the quarter, even if those bills have not yet been paid. The result can be a significant cash flow crunch.”