2021 has had two very distinct periods.
We started off the year as we finished 2020, in a national lockdown, with all employees being advised to work from home if possible. From the off, there has been a lot of commentary about the impact the pandemic was going to have on the legal sector. It was initially expected that during the pandemic [1], we would see an increase in the number of law firm insolvencies. The reality was that for the first 7 months of the year it was a calm period in terms of new projects, distressed or otherwise. With the exception of one new project involving a distressed firm our focus was on progressing the runoff of projects initiated pre pandemic. It wasn’t that we weren’t coming out as the preferred solution, we witnessed little activity and low numbers of enquiries involving distressed firms.
The reason for this lull in activity could be put down to the fact that the government implemented measures to minimise the impacts of the pandemic on the economy, such as the Furlough Scheme.
From August onwards, we began to see an uplift in activity, some of which may be attributable to the whiplash reforms [1], which came into force at the end of May. A further increase in activity was later felt following the end of the Furlough Scheme in September 2021.
On a positive note, the pandemic has given owners of law firms more time to reflect, and many have become much more proactive in taking control of their firms’ futures. It is for this reason that we have seen an increase in solvent projects, with firms planning well in advance and making more strategic decisions, rather than being forced to close due to financial issues.
An example of a solvent project we completed this year was one involving the merging of two law firms. The merged entity did not wish to continue in a specific sector of the market. The services of Recovery First were engaged to exit that market sector immediately prior to the merger.
Another example is one which involved a firm who wished to close down one department of the firm completely. They instructed Recovery First to arrange for the external run off of their files so that they could strategically exit that specific area of the legal market.
Unfortunately, we also assisted on several projects that involved the closing of law firms due to insolvency, some of the most notable projects reported in the legal press included the administrations of Hampson Hughes and Pure Legal Ltd.
As we look forward to 2022, unfortunately, it is likely that there will be more firms requiring our assistance due to insolvency. It is also very likely that we will be working on a lot more projects involving restructuring as the legal market changes, and firms become more proactive and decide to strategically manage their own exit from specific areas.
One of the most interesting developments in 2021 is the number of projects initiated where we are working with clients forward planning retirement. The ultimate outcome can be significantly improved if an exit is well managed over time.
How can Recovery First assist?
If you are considering your options following the recent changes in the legal market, feel free to get in touch with Recovery First to discuss the best plan going forward.
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 and corporate recovery specialists. Our services are suitable for all types of legal work, using a simple, ongoing process with no up-front costs.
Our brand R&R Solutions [2] has been specifically set up to assist those wishing to exit a market due to retirement [3] or restructuring [4].
We will provide you with all the advice and support you need, and we guarantee 100% confidentiality for all clients. If you would like to find out more feel free to contact David Johnstone via email (david.johnstone@recoveryfirst.co.uk [5]), telephone (07887 796 989) or contact Sally Dunscombe at sally.dunscombe@recoveryfirst.co.uk [6] or 07774 205 870.