Avoiding SRA Intervention: How we Helped an IP with the Closure of a Firm

avoiding sra intervention

Recovery First provides a complementary service for professional advisers, such as insolvency practitioners and accountants who are assisting law firms in exiting a market. Law firms may make the decision to exit a market for a number of reasons, including restructuring, retiring, or firm closure due to insolvency. Quite often, we are approached by insolvency practitioners to assist in completing an SRA compliant closure of a law firm.

Recovery First worked alongside IP firm Quantuma on a highly successful project in a distressed situation in which they were required to act post-haste.

Quantuma project: Background

This was a project in which the Insolvency Practitioners were working against the clock to avoid SRA intervention and bankruptcy of the distressed law firm. The Managing Director of the law firm had previously approached another insolvency firm for assistance. The case was mismanaged by the other insolvency firm, and their proposals to creditors were ultimately rejected as a result. Furthermore, a bankruptcy petition against the solicitor practice was pending.

When Quantuma began working on this project, their main aim was to safeguard the value locked into work in progress (WIP) before bankruptcy or SRA Intervention. Intervention would mean that the intervened firm would be required to cease practice, and the ability to recoup funds for creditors would be eroded.

Quantuma approached Recovery First for assistance on this project due to their ability to act quickly. They also knew that Recovery First could help them to realise significantly more WIP value a discounted sale to an individual firm, if indeed a firm could be identified to take on the case load at very short notice.

 

What did Recovery First Achieve?

Recovery First was successful in maximising the closing firm’s work in progress (WIP) and avoiding SRA intervention using a smooth and compliant process. Within eight working days, their team drew up contracts, analysed the 120 personal injury case files and distributed them to three panel solicitor firms, which went on to realise significant value.

Understandably, the client was very emotional due to the speed of the process; however, Recovery First dealt with all matters as carefully and sensitively as possible.

 

Client feedback

Quantuma’s Mr Cadlock was very happy with the outcome of the project and stated the following regarding his positive experience:

“With respect to administering the entire process quickly, efficiently and compliantly, the Recovery First model worked exceptionally well. It’s the only vehicle providing complementary professional support to the insolvency industry, being a commercial solution that avoids the requirement for intervention.”

 

Avoiding SRA intervention: What is SRA intervention?

Under schedule 1 of the Solicitors Act 1974, the Solicitor’s Regulation Authority has the power to intervene a law firm in certain situations. They will usually intervene to protect the interests of clients to the firm, for example, if they suspect dishonesty. 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 Solicitors Regulation Authority. The firm being intervened will be liable for any costs incurred by the intervention agent.

Avoiding SRA intervention is essential to mitigate 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 can Recovery First assist?

Recovery First work alongside professional service providers, such as IP’s 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.

100% confidentiality is guaranteed for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch today via email (david.johnstone@recoveryfirst.co.uk), telephone (07887796989), or fill in the form on our “Contact Us” page, and we will contact you to discuss the process.

 

It's never too late to speak to Recovery First. Contact us now in the strictest confidence

Sally Dunscombe:

sally.dunscombe@recoveryfirst.co.uk

David Johnstone:

david.johnstone@recoveryfirst.co.uk

Telephone:

01357 440140

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