Clock ticks for legal firms as they desperately cling on

The number of law firms still operating but which will have to close within a matter of days because they have no Professional Indemnity insurance now stands at 117.

The Solicitors Regulation Authority has been able to identify the number – but has told EAT it will not give names.

This is despite concerns that some law firms may try to continue trading illegally.

The firms that are currently still trading without PI insurance have until only December 29 to either find an insurer or shut down.

Seventeen of the 121 firms had not told the SRA they were in difficulty, could not obtain PI, and could face additional sanctions on top of almost certain closure: any law firm without PI should not have been accepting new instructions, although some may have been trying to trade their way out of trouble.

Such firms should instead have been in a process of “orderly winding down” and unable to do any business at all after this Sunday, December 29.

Asked by EAT as to what advice we could give agents that they could pass on to clients getting ready to exchange and complete, we had this response.

An SRA spokesperson said: “We have no plans at the moment to publish the names of those firms in the EPP [Extended Policy Period], but will be reviewing the position after December 29.

“Firms in the EPP are unable to continue working on client matters after December 29 and so we are advising firms in this situation that they need to conclude their conveyancing transactions by December 29, including post-completion work.

“If this is not possible within the timescales they must transfer their files to another firm.

“As estate agents do not fall within our regulatory remit, we cannot issue any advice regarding this.

“Any clients of solicitors in England and Wales who are dissatisfied with the service they receive can take their complaint to the Legal Ombudsman.”

The SRA said it is continuing to work with the 117 firms “to remind them of their responsibilities”.

The figure of 117 contrasts with the 141 that had told the SRA they had not been able to get PI insurance, plus the “substantial” further number that had not informed the SRA:

https://www.estateagenttoday.co.uk/oldeat_news_features/Many-more-conveyancing-firms-hit-trouble-agents-warned

The latest figure suggests that a number of law firms have already shut, while some may possibly have managed to obtain PI insurance at almost the last moment. However, the SRA has not expanded on its latest figure, other than to clarify to EAT that this is the final number.

Mike Haley, SRA director of supervision, said: “Some firms are better than others when it comes to addressing all the issues associated with an orderly wind-down, for example ensuring archived files are stored properly.

“We continue to work with firms to remind them of their responsibilities and the approaching deadline for closure.

“All of these firms are aware that they should not be carrying out any work on behalf of clients beyond December 29 as they would be doing so without insurance, so all live client matters and client monies must be dealt with by that date.

“Firms that continue to practise after December 29 or fail to wind down in an orderly fashion will be subject to swift regulatory action.

“Exercising our powers of intervention may be considered where it is necessary and appropriate in the public interest.”
 
The EPP was introduced for the first time this year, ironically – as some agents may see it – in consumers’ interests.

It is a replacement for the now abolished assigned risks pool (ARP), by which clients of firms without insurance could still get recompense.

The affair has highlighted agents’ concerns over conveyancing, and their possible liability if they have recommended firms or accepted referral fees.