Law firms facing financial problems as a result of the recession have today been urged to contact the Solicitors Regulation Authority for support and advice. SRA supervisors are already getting in touch with practices that may need help, as part of the regulator’s new approach under outcomes-focused regulation.
Financial stability was one of six key risk areas identified by the SRA's Supervision team during their nine-month pilot study last year.
Of over 100 firms, around a quarter showed evidence of financial instability. This ranged from having a lack of adequate systems to wanting, or needing, to close. Work has already begun with these firms to offer guidance and, where necessary, ensure an orderly closedown and minimum disruption to clients.
Now SRA supervisors are contacting other firms showing evidence of being at financial risk. They will be offering guidance, which may include involving other agencies who can help or working with firms to pursue an orderly wind-down.
Marc Baker, head of supervision, said: ‘This initiative is part of our constructive engagement with the profession which has been broadly welcomed by firms.
‘The message we are trying to get across is that firms should contact us when they start to experience problems, rather than leave it until the situation becomes more serious, or even worse, when it's too late.
‘There are a number of ways we can help provide support and guidance on the options available, particularly if mergers or changes to the regulatory status of an organisation are being proposed as part of a solution. We can also signpost to existing agencies such as LawCare, or the Solicitors Assistance Scheme as well as working with firms to ensure that the regulatory issues of any refinancing or restructuring are understood.
‘At the end of the day our priority is to protect the interests of clients – and if possible we want to minimise the need for a formal intervention into firms, which can be a costly solution. For those firms which have to close, an orderly wind-down is the best outcome and we can offer continued close engagement during that process.’
Interventions are down this year on an annualised basis at just 22 so far, compared with full-year totals since 2008 of 62, 64, 97 and 71.
Anyone wanting to contact the SRA should email Contactcentre@sra.org.uk or telephone 0870 606 2555.