Call for expert panel to help avoid formal intervention into failing law firms
The head of a personal injury consultancy has called on the Solicitors Regulation Authority (SRA) to urgently establish an expert panel to help avoid formal intervention into failing law firms.
The SRA went above budget this year due to the unexpectedly high cost of interventions: there were 40 in the year up to March 2013, of which 10 were due to suspected dishonesty, and 60 in the year up to March 2012, of which 12 involved suspected dishonesty. The majority of these were sole practitioners.
According to former Irwin Mitchell partner Lesley Graves, of law firm consultancy Citadel Law, “intervention lite” by an expert panel could reduce costs, increase client protection and prevent asset-stripping by other firms where a practice is in financial difficulty.
“Interventions are due to the reactive approach taken by law firms, the SRA and banks when financial failure is imminent,” she said.
“Earlier monitoring and compliance along with proper financial diagnostics in a collegiate approach would reduce and hopefully prevent interventions altogether.”
Under Graves’ plans, the intervention panel would be made up of experts in regulation, firm turnaround, sale and purchase, accountancy and insolvency. It would be called in as soon as the SRA became aware of a firm’s financial distress.
She predicts further claimant personal injury firm failures ahead.
An SRA spokesperson said the cost of interventions would be partly covered by the compensation fund this year, and entirely met by the fund from 2014, and solicitors’ fees and contributions would go down next year.
