Twenty four members of staff at Just Costs Solicitors, which went into administration in January, have won an employment tribunal claim for unpaid wages.
Employment Judge Franey in Manchester said the firm failed to comply with the requirements of section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 to consult appropriate representatives of the employees about the dismissal.
As a result, the firm was ordered to pay to each claimant remuneration for the protected period of 90 days from 25 January 2019 when the first of the dismissals took effect.
Just Costs was set up in 2006 and was the first law firm to specialise purely in legal costs. It became an alternative business structure in 2013, at which point it had nearly 100 staff and a turnover of more than £5m.
In November 2016, it began operating under a company voluntary arrangement, under which it sought to repay creditors in full with 24 monthly payments of £33,000.
A year later, after it failed to keep up with the schedule – 28% of what was owed was paid – the firm was sold out of administration to a new practice set up by founder Paul Shenton and fellow solicitors Jodi Booth and Adam Quinn that traded as Just Costs Solicitors (JCS).
The joint administrators appointed in January blamed both “the regulatory and financial pressures currently being placed on the sector” and cash flow issues for its failure.
For the 11 months to 30 September 2018, turnover was £2.2m, with a loss of £380,000.
Their first progress report said that, by 31 July, £33,200 had been collected from the firms that bought Just Costs’ work in progress.
Of the 952 files that were transferred to six different firms, clients requested that 125 of them be transferred to another practice. Some 196 files were rejected by the panel put together by Recovery First.
The predecessor firms were secured creditors, still owed £740,000, but debtor collections have cleared the debt owed to Close, which funded Just Costs through an invoice finance facility.
The update said that, at that time, it was unlikely that a liquidator would be appointed for the purpose of enabling a distribution to unsecured creditors.
The administrators also said it identified no need for further investigations into what happened at the firm.