The quick answer
There are special rules relating to solicitors as they are regulated by the Solicitors Regulation Authority (the “SRA”). An insolvent firm of solicitors cannot just be sold in Administration or closed and liquidated. Careful consideration needs to be taken of how the SRA will react as they have the right to intervene and take over. There co-operation and involvement will be needed at all stages.
In more detail
The SRA’s right of intervention means they can appoint another firm of solicitors to take over a legal firm. All of their costs to do this (which can be substantial) can be added to the liabilities of the business and may even follow the successor practice so great care needs to be taken here.
The main issue’s the SRA will be concerned about in an insolvent transfer will be:
- Making sure live legal matters are transferred to a new practice – so clients do not lose out.
- Making sure client files are kept confidential.
- Making sure client archive files and papers are protected such as Wills.
- That all client funds are still intact and safe.
Subject to those four criteria being satisfied the firm can be sold to a new owner. This might include a sale as a pre-pack administration to a new firm set up by the old owners and partners.
If you are a solicitor in practice and need help with insolvency please get in touch with me David Kirk. You can email me on firstname.lastname@example.org. All advice is supportive and confidential.