Posted on 3 December 2013
The Solicitors Regulation Authority (SRA) have now confirmed that a total of 141 law firms have not managed to secure professional indemnity insurance and are making the appropriate plans to shut them down with “time being of the essence” according to Dean Nelson, a Partner and Head of Business Recovery & Insolvency at accountancy and business advisory firm Smith Cooper.
The firms in question have been formally notified of the deadlines with which to comply and with only 26 days remaining Mr Nelson believes that now is time to deal with matters head-on stating “it is naturally difficult to receive correspondence, which in effect can not only impact your own life but those of colleagues that you have worked with and employed for a number of years. However, the 141 in question have a duty of care to their clients and staff to take the appropriate strategic advice with a view to maximising what asset value remains and to make alternative arrangements, if an insurer has not been found”.
Mr Nelson went on to warn clients and solicitors alike advising that “anyone identified by the SRA and placed in the Extended Policy Period is at risk until an insurer has been found and cannot take on any new instructions. I suspect that a number of law firms identified are insolvent, by one definition or another, if not both, and should now seek advice from an Insolvency Practitioner, experienced in dealing with law firms, at the earliest possible date.”
The SRA is naturally keen to avoid disruption for clients of the law firms who may not be able to locate a suitable insurer and mitigate the associated costs for the profession. Mr Nelson concluded by adding “I acted as Administrator for HMT Legal in 2013 and have advised a number of law firms in this area both before and after that transaction and what is clear, with my experience, is that in order to protect and maximise the business and assets that proactive advice should be sought, even if it is to be used as last ditch measure, in the event that Plan A fails.”