The role of a solicitor manager in law firm insolvency

Recovery FirstBy Legal Futures Associate Recovery First

When a law firm requires intervention, or is forced to close due to financial distress, there are a lot of issues that must be addressed, such as engaging with the Solicitor’s Regulation Authority (SRA), informing clients, and deciding what will happen to the firm’s existing caseloads and staff if the firm is required to close.

A solicitor manager has an integral role to play in the administration or liquidation of a distressed law firm. We recently interviewed Andrew Gregory from Leonard Curtis Legal Limited on the role of a solicitor manager in law firm insolvency situations, and he has provided some invaluable advice for solicitors in navigating the insolvency process.

What are the main roles of a solicitor manager?

The interests of clients is at the heart of everything that a solicitor manager does. Law firms face the risk of an intervention by the SRA if it is considered that clients and/or their property may be at risk. Early engagement with the SRA is essential to ensure that it is understood that risk is being managed and there is an action plan which focuses on the protection of the clients.

If a law firm is placed into administration, then the transfer of client files and their money will always be the urgent priority for a solicitor manager.

Clients can understandably be confused by the fact their solicitors have ceased to trade, and another important part of the role is to ensure that clients properly understand their rights to choose a solicitor they wish to instruct going forward. This, taking into account other external factors, such as funding and ATE insurance in contentious matters.

Clients will sometimes raise complaints about the manner in which their matter has been handled by the firm and liaison with the SRA and the Legal Ombudsman. Another important part of the role, therefore, is ensuring that the firm, even though it may be in administration does not fall foul of its regulator.

What aspects of your role do you find most challenging?

The first few weeks of any administration involving a law firm can be difficult for everyone; the clients, employees and third parties dealing with the firm, for example barristers and experts who want to know what is happening with individual cases. Experience has demonstrated that after the first couple of months, the administrators will have been able to get to grips with all aspects, and I can then focus on working with, for example, agencies such as Recovery First, their panel of law firms, third parties and, most importantly of all, the clients themselves.  Client money going to the right place, clients understanding what is happening with their matter and the SRA being updated on a regular basis.

What aspects of your role do you enjoy the most?

The contact with the clients, whilst often challenging due to the fact their solicitor has ceased to trade, but at the same time, it is often the most rewarding part of the role as you are able to get a real sense of making a small but important difference to the clients, who are often worried about their case. Being able to explain the position and put them at ease creates a sense of satisfaction in getting the job done.

What are the main challenges faced by distressed law firms?

In recent years the landscape for the legal services market has been changing at a rapid rate. The constant reduction in real terms of the legal aid budget has forced many law firms out of the high street, leaving firms with no option other than to consolidate to survive. But even then, the rates are so low that it is increasingly difficult to make a living from, for example, criminal law.

The RTA market has shrunk to such an extent that many firms have closed or sought to move their work to other areas, for example GDPR breach cases. But decisions form the courts on this area of law has meant that settlements are low, making it prohibitive for firms to generate significant revenue from this area.

Professional Indemnity premiums continue to increase and with each renewal, the number of players in the market seems to reduce making it increasingly difficult to obtain cover at a manageable level.

Add to this all of the issues currently facing businesses in the UK, rising fuel prices, inflation and higher borrowing costs, it is clear that law firms are far from immune from such challenges.


What advice would you give to law firms currently facing financial issues?

Take advice early. It is always about the planning to manage risk. Having a strategic plan for the business which looks ahead for at least two or three years can really help. Plans change to meet the challenges ahead, but without a plan, then it can often be too late to deal with the issues as they arise. Whether it be loss of work, departure of key staff or increased costs, monitoring and managing the problems with one eye to the future is the best way to manage financial issues.

Looking at alternative funding options is always important and with so many specialist funders in the market, taking expert advice on funding is a good way of managing a way out of difficultly.

Finally early contact with HMRC is advisable. The Revenue will engage if firms are speaking to them and are open with the challenges they are facing. This may not always be enough to stop the Revenue taking enforcement action, but early dialogue is likely to reduce the risk or at least buy some valuable time.

How Recovery First can help

Recovery First can help your firm avoid a distressed situation in the first place by helping you exit any market so you can focus on more profitable areas of law. Perhaps you wish to free up cash locked up in your work in progress – we can help.

Recovery First also work alongside a range of professionals, including solicitor managers, in the assistance of distressed law firms and the process of insolvency. The formal insolvency process for solicitors can be a lengthy one and requires liaison with the Solicitors Regulation Authority (SRA), as well as engagement with insolvency lawyers and insolvency practitioners.

We work closely with insolvency teams and solicitor managers to complete a structured and compliant run-off of WIP files. We aim to recover 100% of the firm’s recoverable WIP value by distributing the files to our panel of solicitors; we have anecdotal evidence of project where recovery of WIP has exceeded 100% of that recorded.

Our team manage the whole process from compliant transfer of files , placing case files with an approved appropriately skilled panel law firm to protect the integrity of the client’s case through to collection and management of costs at conclusion.

If you would like to find out more about Recovery First’s process, feel free to get in touch today with David Johnstone at, telephone 07887796989 or contact Sally Dunscombe at, telephone 07774205870.


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