Set against a backdrop of over 100 UK law firms currently under threat of closure for failing to obtain professional indemnity insurance, South West law firm Follett Stock is the latest to fold after the Solicitors Regulation Authority (SRA) announced yesterday (6 November) that it had closed down the insolvent firm.
The SRA’s intervention means the Truro-based firm, which also had offices in London, Exeter and Bristol, has been forced to stop operating with immediate effect after being served a winding-up petition by HM Revenue & Customs (HMRC) in August.
The firm’s 30 staff will be made redundant and the SRA will take possession of all documents and money held by the firm. KPMG’s David Standish and John Milsom were appointed compulsory liquidators on Monday (4 November) and an intervention notice from the SRA yesterday (6 November) said it was satisfied there were grounds for intervention ‘in order to protect the interests of clients (or former or potential clients)’.
The liquidators at KPMG will now seek to investigate the affairs of the firm and determine the assets which can be realised to benefit the creditors.
SRA director of client protection, Helen Herniman, said: ‘In cases like these where the firm has become insolvent, we only intervene once all other options have been exhausted. We have had to intervene on this occasion as there was a clear risk to clients’ interests caused by the firm’s financial difficulties.
‘The legal services market is facing a tough economic environment and other firms may find they are in a similar position. We’d urge all those who may be struggling financially to get in touch as soon as possible with either ourselves at the SRA, or other organisations that can offer advice such as their local law society.’
This news comes after SRA announced at the end of October that 153 law firms were at threat of closure after having failed to secure professional indemnity insurance (PII) cover and have now entered the 60-day cessation period in which they can only deal with existing instructions while they seek an insurer.
Other firms to have stopped operating recently include Manches and London litigation boutique Harris Cartier, which both entered administration last month having failed to pay their PI insurance.