Possibly Closing Down due to PII'S & Lenders' Discrimina

[monhappy]

I am a sole practitioner for the last 2 years following the death of a partner.

I have been searching for another SP who does mainly Probate work to join me but this has not been successful. If there is anyone out there who would want to consider becoming a partner please do get in touch.

I do mainly residential conveyancing and a little non-contentious probate. I have never had any claims nor has the firm. The firm has been around for over 10 years. My indemnity premium 2 years ago was around 2,500 and last year it almost tripled to over 6,000 even though there were no claims ever.

In view of the recent Lenders' Discrimination I am unable to undertake work for many prospective purchasers due to the increasing number of Lenders who are removing firms from their panels due to what they say is low volume of work. How do we defend ourselves in this economic climate where Lenders are offering such few mortgages to prospective borrowers? Further, some Lenders are not even telling us the criteria they adopt to determine what is an inadequate level of work.

I have not really paid myself regularly and have accountant's fees to pay in Nov/Dec which I hope I can pay.

Due to these problems I am considering voluntarily closing the firm and wanted to get some help in doing this if this year's premium is going to be even higher.

Can anyone help in guiding how to wind down the practice ( which involves closing the client account by either returning monies to clients or completing matters and paying disbursements first; informing clients of the intention of the firm to voluntarily close down) and THEN notify the SRA of the closing down. Is that the right procedure? The reason I ask is because I don't want the SRA to intervene as I don't think they need to. How would I satisfy the SRA that I had voluntariy closed down efficiently please and WHEN should I inform them (so that the likelihood of them intervening is reduced)? I want the closing down to be as painless as possible - the thought of closing down itself is painful enough when one has dedicated all efforts to making it a success which it has been save for the onset of the major economic downturn, the culling of the Sole Practitioner and the Lenders' Discriminatory attitude towards the smaller firm. I can only see the death of the High Street practice and many former clients yearning for it in years to come.

I'd like to make an informed decision and also plan how to effectively close down without the need for intervention if my premium offer is unacceptable to me.

[Karen Purdy]

Hi

I'm really sorry to hear that things are getting so difficult for you.

On a practical level, the SRA should be able to give guidance and avoid an unnecessary intervention. I will get in touch with my contacts there and raise this as an anonymous query and hopefully get back to you shortly.

Someone raised this issue in another post and I had the following information -

Simon Holmes came up with some additional comments and practical points:

"It is very sad that someone... feels that closing is the only solution. If it is only a matter of run off then I would have thought that it is worth persevering, as something may happen about run off, but if the correspondent feels that (s)he is working hard for nothing and has had enough, I understand

I don't know what this practitioner does, but one has to go into run of before the end of the current year, and Quinn must honour that [depending on the contract terms and circumstances] as it is part of the current contract. I understand there is a form to complete, which includes a statement that the client account is empty. That can be a problem in some areas of law - such as my debt collecting.

One must de register for VAT which means writing off unpaid debts - or paying the VAT on them. There is guidance on the VAT website.

A final client account report must be completed, so there is an expense to be covered for that.

If it is possible to find a successor practise to keep the files and give old clients somewhere to go, it is probably worth it. Under the new rules - are they in yet? the successor practice can be freed form liability for old cases if run off is paid. The successor is getting your list for clients so may be prepared to help with run off.

Obviously notice needs to be given on leased equipment, offices etc."

I hope that this is helpful and am happy for SPs to contact me, SPG's new Chairman Lawumi or anyone on the Committee to discuss issues like this, as we will try to help.

Karen

[monhappy]

Just got approached by another firm today to have initial talks about possibly taking over my practice. Does anyone know if there is a set procedure to set the wheels in motion for a smooth take over by another firm?

The professional ethics dept of Law Society told me that first of all the transfer of files had to be negotiated with the successor practice; my client account be brought to nil or transfer monies to new practice or return monies to client;successor practice to contact their PII insurers about this; notify SRA about 7 days before the formal takeover. Does this sound correct or have I missed something here (never having done this before!)

If that means not paying run-off cover this take over would be good for me.

In The Law Society website I read that (paraphrased):- Where there is a successor practice, from 1 October 2010 one may elect to trigger run-off cover under the current PII policy. If you do NOT elect to, or do not meet the notification and premium payment requirements, the insurer of the successor practice will be required to cover the claims against your ceased practice. WHAT DOES elect to trigger run-off MEAN? If one is being taken over by a successor practice isn't one of the advantages not having to pay run off cover and therefore NOT triggering run-off?

If anyone has any helpful information about what to be careful about when being taken over by a successor practice please let me know.

Let's see if these talks reach a healthy conclusion ...perhaps there may be light at the end of the tunnel, albeit a very small one at the moment. Otherwise it will have to be a winding down and ceasing of the practise.

I look forward to hearing from you Karen. Thanks for the earlier feedback. It is much appreciated.


Regards to all.

[Yorkie]

I posted a similar post recently - please feel free to have a look. I have decided to close and sent all letters out last week, including notification of the SRA. I see no reason for them to intervene if you follow their guidance and close everything down fairly and properly. If you want to chat things over, feel free to get in touch.

[monhappy]

Thanks for your guidance Yorkie. How can I get in touch with you for a chat?

Regards

[Yorkie]

Hi, my telephone number is 01723 351994 or email jessica@applebyandco.com

[Karen Purdy]

Hi again,

I have some additional guidance (below) on PI insurance and closing down from Bronwen Still at the SRA.
Karen


The Law Society is going to run its Professional Indemnity Insurance helpline again from 16 August and the number is 0207 320 9545 and it has issued an updated practice advice note at www.lawsociety.org.uk/productsandservices/practicenotes/piinsurance/4527.article

In addition, queries about closing a practice are dealt with in a guidance note on the SRA's website issued by the ethics guidance team at www.sra.org.uk/solicitors/code-of-conduct/guidance/Closing-down-your-practice.page. The note also contains details of other sources of help such as LawCare and the Solicitors Assistance Scheme.The guidance team can be contacted on 0870 606 2577 for further help.

Finally, I understand from the Indemnity Insurance team that there is a new insurer in the market, Vision, which is targeting the 1-3 partner firms which comprised Quinn's target market. Travelers are also looking at the smaller end of the market which year. They can be approached direct - http://www.lpinsure.co.uk/

[monhappy]

Thanks Yorkie and Karen.
I just received a surprisingly low pii quote, one third less than last year, at £4k with run-off at 200%. Have decided to carry on. Wondering if that is a sound decision! If I had closed down before this Sept 30th my run-off would have been 300% at £6K! Amazing how many contingency plans one has to make at the moment being a sp. Am trying to be positive and also looking for a solicitor to employ who does mainly non-contentious Probate law whether as a partner or as an employee. Please contact me via this website if interested. Regards

[katherine]

Glad you have decided to carry on monhappy. I have also received two lower quotes than last year which is a pleasant surprise! Where are you based?

[monhappy]

Hi Katherine. I'm based in Ealing. Where are you based? What type of work do you do? Rgards.

[Karen Purdy]

I am really glad to hear that you have received favourable quotes, Katherine & Monhappy.

My quotes have also come back lower than expected - phew!

It seems that SPs are having such a wide range of experiences, depending on who they were insured with last year, their work-type etc.

The PI helpline is there is other SPs need it and the SPG Committee are always happy to assist.

[katherine]

I am based in the Midlands monhappy. I have found it invaluable to have the support of other SP's - we are not alone!!

[Yorkie]

Excellent news!

[wren271]

Monhappy - i read your posts with interest. I may be able to help you in your search for assistance with probate work. If interested, please call me on 0203 371 7756,

[humphres]

I am too having issues this year getting insurance though have had no claims and otherwise have a successful practice. I am however doing all conveyancing practically nad am a sp which is proving to be my downfall unfortunatey. I am looking at the various options. Monhappy I would be interested to hear how you went about approaching possible mergers if you have time to discuss with me please? I'm happy to hear you got insurance in the end though.
If there is anyone out there in the Northwest area that would be interested in merging please let me know. Thanks.