Law Firm CLosing: Orderly Closure Ensuring SRA Compliance

law firm closing

Law firm closing: Planning for an orderly closure

Law firm closure can happen for a number of different reasons, including retirement, career changes or insolvency. As the legal sector is closely regulated, closure of a solicitor firm can be a particularly complex matter. SRA compliance and an orderly closure should always be a priority to protect the interest of clients. There are many things to consider when closing a law firm, such as what will happen to staff, who will take over files, and obtaining appropriate runoff cover. Due to the complexities involved with a law firm closing, it is essential that the closure is planned for well in advance to prevent a disorderly closure.

 

The SRA has provided some guidance on ensuring an orderly closure and SRA compliance.

What happens when a law firm closes?

When a firm of solicitors closes, they must notify their clients of their intention to cease trading, and inform them of what will happen to their case as early as possible so that they can seek an alternative solicitor to take on their case. They must inform the SRA of their intention to close using a Firm Closure Notification form as soon as possible. They should also notify their professional indemnity insurers and a number of other parties, a list of these parties be found on the SRA website. Firms should ensure that they have appropriate run-off cover in place to cover the costs of any claims made against the firm after they have closed.

 

Law firm closing: Types of closures

There are a number of options for solicitors wishing to close their legal practice. Some may wish to close the firm completely, whilst others may opt to sell all or part of the business to another firm of solicitors. An external party may agree to buy the firm and operate under the current firm’s name, or an ABS may be created.

 

Selling a firm to a single purchaser

When planning for the closure of a solicitor’s firm, the closing firm may agree to sell all of their files in bulk to a single purchaser, and the transfer of staff may also be included in some sales. The downside of selling to a single purchaser is that the selling firm may not get the best price and WIP value for their cases.

 

Using Recovery First to assist in the orderly closure of a law firm

The Recovery First model can be used to assist closing law firms in the orderly run off of files, ensuring full SRA compliance. We also provide a complementary service for professional advisors that assist in the closure of law firms, such as advisory only accountants and indeed solicitors specialising in regulatory matters advising their peers.

Our process involves discreetly selling a firm’s cases to multiple purchasers on our 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.

In some cases, we can facilitate a cash advance to cover administration / set-up costs. Our team manage the transfer of files from start to finish, placing case files with an approved law firm to protect the integrity of the client’s case.

We 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. We monitor case progression and conclusion in real time and account back to our clients for the value realised on an agreed reporting period.

 

Why choose Recovery First to assist in the law firm closing process?

 

Law firm closure can be a complicated process. Whatever the reason for closing your firm, Recovery First will ensure the most positive and profitable outcome is achieved, ensuring an SRA compliant orderly closure. The selling firm’s clients not only get a seamless transfer, but they will also be matched with a firm specialised in their particular needs.

The unique scheme offered by Recovery First is suitable for law firms and professional advisors, including accountants, merger and acquisition consultants, restructuring and insolvency lawyers, insolvency practitioners, corporate recovery specialists and legal regulatory consultants. Our services are suitable for all types of legal work, using a simple, ongoing process with no up-front costs.

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 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

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01357 440140

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