Legal Business Blogs

Amid a punishing regional market, Challinors becomes latest to call in the administrators

It’s not as if anyone needs reminding that the legal market remains challenging, and doubly so for regional advisers. But driving home that point this month, Midlands-based Challinors has become the latest sizeable practice to call in the administrators after the failure earlier this year of Cobbetts and Scots practice Semple Fraser.

The Birmingham-headquartered adviser, which offers services in areas including disputes and private client, has filed a notice of intention to appoint Eric Walls and Wayne Harrison from KSA Group as administrators.

According to Companies House records, a new company was established under the name of Challinors Legal Limited on 23 July under the Companies Act 2006, with company directors including business consultant Kersten Pucks.

A statement from Challinors said: ‘Working in conjunction with our key stakeholders, we have taken steps to protect our position pending a sale of the business by filing a notice of intention to appoint an administrator. This will allow an orderly transfer of the business in the near future. In the interim, the business continues to trade normally and we give an assurance that the interests of our clients and staff have been safeguarded.’

It was reported last week that Challinors owes unsecured creditors £11.2m, including £4m to Allied Irish Bank and nearly £500,000 to HM Revenue & Customs.

Challinors’ struggles echo that of Cobbetts, the bulk of which was acquired by DWF in February for £3.8m  as the Manchester law firm went up for fire-sale. Scotland’s Semple Fraser went into administration in March, with RSM Tenon accountants Tom MacLennan and Kenny Craig appointed as joint administrators.

News of Challinors’ likely fire-sale comes amid tough trading conditions in many of the UK’s regional legal markets. The Solicitors Regulation Authority warned earlier this year that 160 firms in England and Wales are in financial difficulties, including 30 in the top 200 law firms domestically. Of this 160, it said that eight were at immediate risk of collapse.

Banks and accountants to law firms have since 2009 claimed that many practices are in trouble, though the UK has so far seen only a handful of substantial collapses, most notably the failure of Halliwells in 2010. A set of poor results from many regional practices for the 2012/13 financial year suggest such predictions have some substance.