Finance

A City law firm partner who had to pay £215,000 to settle his debt to the bank of his former firm, which had gone bust, was not able to deduct it from his earnings at his new firm for tax purposes, the Court of Appeal has ruled.

A leading north-west law firm has been ordered to pay £68,000 in VAT for electronic local authority property searches it procured from an agency, after a tribunal ruled that they should not have been treated as disbursements. The case, in which the Law Society unsuccessfully intervened, could have significant repercussions for many conveyancing firms.

A sole practitioner who did not have a client account and admitted using his office account “at times as a personal account” has been struck off by the Solicitors Disciplinary Tribunal. The tribunal heard that Michael Healey, based in Liverpool, misappropriated over £31,000 of client money before going bankrupt.

A personal injury law firm has lost a £4.5m claim against a legal expenses insurance underwriting agency that the expected number of referrals did not materialise. The firm failed to convince the High Court that there was a contractually binding oral promise in place from 2006 to 2011, when referral fees were lawful.

The Solicitors Regulation Authority has dropped a new definition of ‘client money’ which would have excluded fees and disbursements in response to the concerns of practitioners, but is otherwise moving ahead with a huge rewrite of the accounts rules that reduces them from 41 pages to just seven, and approves the use of third-party managed accounts.

Partners at a leading personal injury law firm have lost a professional negligence action against the accountants who recommended they sign up to two ultimately unsuccessful tax mitigation schemes. They succeeded at every stage of their claim only to fall at the last when the judge ruled that they brought the action out of time.

Fee income per partner at larger firms soared last year from an average of £777,000 to almost £1.4m, a survey has found. Accountants MHA, who produce an annual benchmarking report, said the main reason was a fall in the number of equity partners at these firms, helped by an increase in profitable work.

The cost of conveyancing has risen 37% over the past decade, greater than the overall rise in the cost of moving home, new research has found. But it remains a relatively small proportion of the overall cost of moving home, however, which was put at £9,472 – although this was considerably more than people budgeted for.

The financial performance of smaller law firms has improved over last year, with both fee income and profits up significantly above inflation, according to an annual benchmarking survey published this week. Very little increase in salary costs, improved lock-up, and reductions in both WIP and debtor days contributed to the positive picture.

Leading litigation firm Stewarts Law is “sufficiently well-funded” to cope with £2m intended to pay its fees and disbursements sitting frozen in its client account, while the true owner of the money is identified, the High Court has ruled.

There have been some significant thefts from client accounts in recent months, with one in four SME law firms having suffered a cyber-attack or fraud related loss in the last year, according to new research. The poll of 269 firms also showed that income and profit continues to rise, although cash remains an issue.

Fast-growing alternative business structure Knights Professional Services has moved on from private equity funding and giving away an ownership stake, and turned to a major European lender to finance to next stage of its expansion. We revealed last month that James Caan has sold his stake in the firm.

A finance company for law firms has announced that it wants to delist from the stock exchange as it awaits a crucial Supreme Court ruling. It is the first of two Supreme Court cases that focus on interpretation of the minimum terms and conditions for solicitors’ insurance, the second of which was before the justices yesterday.

The latest skirmish in a long-running row between two solicitors whose partnership dissolved in acrimony, has seen the High Court rule that the failure of one to mention to his creditors that he had been struck off was a “material irregularity”.

Finance staff at larger law firms are seeing their pay rise as the market becomes more competitive, a new survey has found – while those working for small firms were the least likely to have had a pay rise in the past year, despite proving the most loyal.