Another volume consumer claims firm goes down owing £37m


Car finance claims: Firm struck loan deal last year

Another law firm specialising in volume consumer claims has collapsed, with administrators called in yesterday at Liverpool-based McDermott Smith Law.

Its most recent abbreviated accounts, for the year to 31 March 2023, said it owed creditors £37.5m.

After a notice to appoint administrators was filed on Monday at the instigation of litigation funder Fenchurch Legal, yesterday Andrew Hosking and Sean Bucknall of Quantuma Advisory and Damian Webb of RSM UK Restructuring Advisory were appointed joint administrators.

Meanwhile, the Solicitiors Regulation Authority (SRA) announced today that it had intervened in McDermott Smith as a result of an “insolvency event”.

McDermott Smith handled housing disrepair, motor finance, business energy, undisclosed commission, personal injury, Japanese knotweed and debt claims.

The accounts showed huge expansion between 2022 and 2023, with creditors going from £5.8m to £37.5, debtors leaping from £6m to £37m, and staff numbers nearly trebling from 24 to 69.

Law Society records, however, show that only four solicitors were working at the firm, including founder Andrew Smith.

Companies House shows also that in May 2023 McDermott Smith agreed a funding deal with Katch Fund Solutions to back motor finance claims.

Katch was a major backer of consumer claims firm SSB Group, which went into administration at the start of the year.

Mis-sold car finance is tipped as the next big growth area for consumer claims and was part of why the SRA recently issued guidance on claims management activity.

Mr Smith has not responded to an approach for comment that we made earlier this week.

We recently released a recorded webinar, Motor Finance Mis-selling Explained, while our inaugural Claims Futures conference on 12 November will consider the regulatory and other issues involved in volume consumer claims.




Blog


From text to world: The legal significance of multimodal AI

The next phase of AI, already underway, will integrate text with vision, sound, motion and even touch. This will produce systems that no longer ‘read about’ the world but perceive it.


The new leaders of law

Where once many law firm owners remained technology sceptics, a growing number are now shaped by leaders who are digitally fluent and commercially oriented.


Managing lock-up, cash flow and billing inefficiencies better

If law firms view lock-up, cash flow and billing processes as key indicators of financial performance – and therefore risk – they can identify problems early.


Loading animation