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Criminal law firm rescued

Posted by Mike Manwaring on Wednesday, 06 November 2013 in General

Lameys has recently secured a company voluntary arrangement rescue scheme for a regional firm of solicitors, practicing in criminal law.  The Practice, which comprises two companies and a limited liability partnership, currently employs 27 duty solicitors and in July of this year was the 15th largest criminal law firm in England and Wales.

The Practice was in regular contact with the Solicitors Regulation Authority and Legal Aid Agency who were kept appraised throughout the Company Voluntary Arrangement (“CVA”) process.

Simon Hicks of Lameys Plymouth office has stated, “In this particular case it was clear from the early meetings that the core business of the Practice was sound.  The problems facing the Practice, which included staffing levels and the Legal Aid Agency payment processes, are common problems for most criminal practices.  Indeed several firms have recently been wound up or appointed administrators, which has resulted in a much lower return to creditors than is achievable through  a CVA.  We are delighted to be able to provide the mechanism to help the Practice to avoid a similar fate.”

The Practice was facing a financial cliff, partly due to issues with the rules for payment from its paymasters’ (The Legal Aid Agency).  As with most government departments, the Legal Aid Agency has seen its budget cut in recent years and the most recent Consultation period with the Ministry of Justice looking at further significant cuts in Criminal Legal Aid has just come to an end.  Historically the Practice’s overheads were too high and it had to make cuts earlier in 2013, including several redundancies.  The consequence of previously high overheads, redundancy cost and an accumulation of fees due from the Legal Aid Agency meant the Practice was not meeting its liabilities and previously arranged payment plans were about to default and become terminal.

Lameys was able to agree CVAs for the two companies and the limited liability partnership.  As a result, the practice survives, jobs have been saved and their numerous cases and ongoing trials have not been disrupted.  The CVAs were approved by the Practice’s creditors including HM Revenue & Customs at meetings of creditors held during September 2013.  The creditors’ debts, including redundancy entitlements will be dealt through the CVAs.

The Practice’s managing partner said, “I have been very pleased indeed with the advice and support that I have received during this very difficult period.  Lameys were able to grasp the fine detail of a complicated business structure and set of processes, and apply their knowledge and experience to secure a basis of agreement in what seemed to me like impossible circumstances.  As much as one can in Criminal Law, my future is far more settled now than previously, and it feels as if a huge burden has been lifted from the firm.  The SRA have confirmed with me since the CVA that they have no issues that cause them concern with the financial position of the business.

One unexpected consequence has been that since Lameys involvement, the morale of the firm has dramatically increased, and we have enjoyed the best six months of trading since the firm started in the mid 1990s. We have, with Lameys help, achieved what I thought would have been impossible – increased income and reduced overheads, and the future looks very bright indeed.  I have no hesitation whatsoever in recommending Lameys.”

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