Recently, we have been approached by clients of another firm that had gone out of business. They asked us for help with their legal affairs. So, we thought we would discuss what happens when a law firm goes out of business.
Recently, McClure Solicitors entered Administration. That means that it is unable to meet its debts. An Administrator was appointed to try to realise maximum value for the creditors of the company. The assets of the company were sold to another law firm and clients have been invited to contact other solicitors to look after their interests.
What about ongoing cases when a law firm goes out of business?
Clearly, the firm that has gone out of business can no longer deal with any legal work. That means the client needs to find another solicitor. This sometimes needs to be done very quickly when there is an active, ongoing case. Once a new solicitor is appointed, the new solicitor will contact the firm currently holding the assets. The new solicitor will ask that the file of papers and any funds held in the client account of the firm that has gone out of business be sent over to them. The new solicitor will ask the client to sign a mandate that authorises the transfer of the file and funds.
What about important documents?
Solicitors hold a wide range of documents on behalf of clients. Documents such as Wills, Powers of Attorney and Title Deeds are normally held in safe custody for clients. When a law firm goes out of business, clients need to appoint a new solicitor. They will ask their new solicitor to obtain any documents held in safe custody by the law firm that has gone out of business. The new firm of solicitors will have the client sign a mandate and this is sent to the firm holding the documents.
What protections are there when a law firm goes out of business?
The Law Society of Scotland ensures that all firms of solicitors practising in Scotland hold professional indemnity insurance and contribute to the Client Protection Fund. In fact, you can find more information on these protections on the Law Society of Scotland website by clicking here.
If you would like any advice or assistance with any legal matter, please call us on 0141 647 9851 or send us an email to email@example.com and we will be pleased to help.