SRA: ABS intervention
The number of alternative business structures (ABSs) licensed by the Solicitors Regulation Authority (SRA) hit 200 yesterday, but the first ABS liquidation and first licence revocation have tempered any celebrations.
Well-known media firm Wiggin, based in London and Cheltenham, became ABS number 200, with boutique corporate practice gunnercooke following as number 201.
Gunnercooke is a partner-only, fixed-fee business that keeps low overheads through a dispersed model, supported by assistant consultants. Founder Darryl Cooke said the ABS application was made to allow non-lawyers to co-own the business, and also because it fitted the firm’s innovative culture as it moves away from the traditional legal model.
The number includes Hacking Ashton, which entered into liquidation on Friday following a creditors meeting, which was told no buyer for the practice had been forthcoming.
The firm was based in Newcastle-under-Lyme with branches across the midlands following a series of acquisitions in recent years. It had 10 partners, 75 staff and £3.5m revenues, and told this website in March that the ABS licence was because it had a non-lawyer partner anyway and was also looking for external investment.
Creditors were advised how declining fee income had led to losses, which in turn had resulted in the practice having insufficient cash to pay its annual professional indemnity insurance.
Matt Ingram, of liquidators Duff & Phelps, said: “Despite our best efforts working with the partners of the practice over the last few weeks, we have been unable to find a buyer to take the business forwards.”
He said that despite “a good level of initial interest”, the successor practice rules had appeared to put off potential buyers.
Clive Woolliscroft, who was Hacking Ashton’s managing partner, said: “The practice stopped taking on new matters at the end of September and since then our staff have been fantastic in trying to ensure that live files were transferred in an orderly manner, despite knowing that they were likely to lose their jobs in the very near future.”
He said the SRA had been kept informed and that the firm had avoided intervention by ensuring that all client files have been either transferred to alternative solicitors firms or are secured and under the liquidators’ control. “The liquidators will continue to work with officials to ensure that client’s data is not put at risk.”
Meanwhile, Stratford upon Avon firm GPB Solicitors has had its ABS licence revoked following the SRA’s intervention into the practice on the grounds of suspected dishonesty on the part of an employee and alleged failure to comply with the accounts rules, although it remains on the regulator’s ABS register.
GPB, a £5.5m turnover debt recovery processing specialist, was granted the licence in February. It told Legal Futures that ABS status would allow commercial clients to become more involved through either investing in – or becoming part of – the business.
Dear Mr Rose,
Thank you very much for your illuminating article. I fear that Alternative Business Structures may not be so marvellous after all.
I wonder how many more ABS structures will fail?
It seems to me to be ironic that the SRA is a Solicitors Regulation Authority where many solicitors have either found themselves considering leaving the profession or else have gone to the wall. Why have the Regulators not gone out of their way, along with the Law Society, to protect those people already in the profession?
It seems to be at odds with natural justice.
Thank you so much for your thought-provoking article.
Rosemary Cantwell