My Solicitor Has Ceased Trading: What Should I Do?

sarah ryan
Sarah RyanAccount Manager @ Lawhive & Non-Practising Solicitor
Updated on 18th August 2024
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If your solicitor has stopped operating, you will need to find a new solicitor. Although this can be daunting, especially if your previous solicitor held important documents or funds, the process is often much easier than it seems.

If you find yourself in this situation and your solicitor has ceased trading, this article will help you understand what you need to do next.

Why might a solicitor cease trading?

Common reasons why a solicitor may cease trading include:

Health issues or personal reasons

A solicitor may face sudden health problems such as serious illness, dementia, or mental health issues that force them to retire unexpectedly. These situations are often unforeseen and can lead to an abrupt closure of their practice.

Similarly, significant personal events, such as family emergencies or drastic life changes, might also force a solicitor to stop trading without prior notice.

Financial issues

Like any business, law firms require a steady income to cover operational costs, including salaries, office rent, and other overheads. If a firm struggles to maintain profitability due to factors like mismanagement, a shrinking client base, or broader economic downturns, it may be forced to close.

In extreme cases, financial difficulties may lead to insolvency, where the firm is unable to pay its debts. This situation often results in the firm ceasing operations.

SRA intervention

The Solicitors Regulation Authority is responsible for overseeing and regulating solicitors in England and Wales. If the SRA discovers that a solicitor has breached professional standards, engaged in misconduct, or failed to comply with regulatory requirements, they may close down the solicitor's practice to protect clients and the public.

How can I find out if my solicitor has stopped trading?

The SRA maintains an up-to-date record of all solicitors and firms, including information on whether they are still trading or have ceased operations.

All you have to do is visit their website, go to the search bar, and in the first entry box, input either the solicitor's name or their ID number. In the second entry box, select “closure” as the outcome type, and in the third box, choose the appropriate date range.

If you can't find the information you need on the website or if you require the most current and comprehensive history of a solicitor, you can contact the SRA directly for assistance.

My solicitor has ceased trading, what happens next?

If your solicitor has ceased trading, one of three things may happen:

  1. The SRA may appoint another form to take over your case;

  2. The closing firm may help you find a new solicitor;

  3. You may decide to find a new solicitor yourself.

SRA appoints another firm

If the SRA appoints another firm to take over your case, the new firm should contact you to inform you of the transition.

You will need to review their terms of service and decide if you want to continue with them. If you are satisfied with the new firm, you can allow them to continue handling your case.

The closing firm assists you

If the closing firm helps you find a new solicitor, they will either return your documents directly to you or help transfer them to the new firm.

If the closing firm does suggest a new solicitor, make sure to receive their credentials and services before agreeing to transfer your case.

You find a new solicitor

If you decide to find a new solicitor to represent you, there are several ways you can go about it.

Check out our Ultimate Guide to Finding a Solicitor Near You for tips and tricks on doing so.

What happens to my documents if my solicitor's firm closes?

No one wants their sensitive legal documents to be misplaced or mishandled. That’s why it’s so distressing when a solicitor closes up shop and leaves you wondering where your files will end up.

Ultimately, the fate of your legal documents, following a solicitor closure, will depend on whether the closure was voluntary or involuntary following SRA intervention.

Voluntary closure

If the firm closes voluntarily, they may return your documents directly to you before their final day of operation, or, with your consent, they may transfer your documents to another solicitor or firm that will continue to handle your case.

If you’re unable to retrieve your documents before the closure, the firm might transfer them to the SRA, who will then oversee their safe handling.

Involuntary closure

If the firm is closed due to regulatory actions by the SRA, it will appoint an agent to secure all client files and documents.

In this case, they may transfer your files to another firm that can continue to represent you or they may arrange for the documents to be returned to you directly.

How to recover funds held by a closed solicitor

Losing your solicitor is a stressful experience in itself. But it can feel even worse if you entrusted funds to them.

Fortunately, client money in the UK is strictly regulated in that solicitors are required to keep client funds in separate accounts. This means your money remains safe even if the firm experiences financial difficulties or closes down unexpectedly.

So how can you get it back?

Well, first start by reviewing any agreements or terms of service you had with the solicitor's firm. This will help you understand the terms under which you might be eligible for a refund.

If the firm has gone into liquidation, you should contact either the firm or the liquidator directly to request the return of your funds.

In cases where the SRA intervenes, they may appoint an agent to manage the closed firm’s affairs, including the return of client funds. The SRA can inform you if an agent has been appointed and how to contact them.

Sometimes, another law firm will take over the cases and client accounts of a closed firm. If this has happened in your case, you can contact the successor firm to inquire about recovering your funds. The SRA can also assist in determining if a successor firm has taken over.

What if funds are lost?

The SRA operates a Compensation Fund designed to protect clients from financial losses caused by a solicitor's dishonesty or failure to account for client money. This includes situations where the solicitor has misappropriated funds or if the funds have been lost due to the firm's insolvency.

You can apply to the Compensation Fund by submitting a claim to the SRA. The claim should include all relevant details, such as the amount lost, evidence of your payments, and any communications with the solicitor or their firm.

Solicitors in the UK are required to have professional indemnity insurance. This insurance is intended to cover claims arising from negligence or failure in the service provided by the solicitor. If the loss of your funds was due to negligence, you might be able to make a claim against this insurance.

Contact the SRA or a legal advisor to determine if professional indemnity insurance applies in your case and how to proceed with a claim.

If the above avenues do not resolve the issue, you may need to take legal action against the firm or the individuals involved, particularly if the loss of funds was due to fraudulent activity.

Consult with another solicitor or a legal advisor who specialises in professional negligence or legal malpractice to discuss the possibility of recovering your funds through the courts.

You can also claim compensation for unfinished legal work through the Solicitors Indemnity Fund (SIF). The Solicitors Indemnity Fund, which is now under the SRA, covers claims against solicitors for professional negligence. You can submit your complaint online to the Legal Ombudsman either by calling or writing.

How to transfer your case to a new solicitor

Once you’ve chosen a new solicitor, you’ll need to transfer all the documents you retrieved from your former solicitor to them.

Your new solicitor will also likely require you to sign a letter of authority which allows them to contact your previous solicitor or the SRA to get any additional information they might need to fully understand and manage your case.

How long it takes to transfer your case can depend on how your previous solicitor's firm closed. If it was an unexpected closure, the process might take longer, as your new solicitor will need to review your case files thoroughly and potentially request additional information from the SRA or the previous firm.

Conclusion

Discovering that your solicitor has ceased trading can be overwhelming, but by staying calm and taking the right steps, you can manage the situation effectively. Whether you need a new solicitor or someone to take over your case, Lawhive is here to support you.

Our network of dedicated, licensed solicitors operates online, making it easy and convenient for you to secure legal representation. We can help ensure the smooth transfer of your legal documents from the SRA or your former solicitor, so your case can continue without unnecessary delays.

Reach out to us today for a free case assessment and a no-obligation quote, and let us help you navigate this challenging situation with confidence.

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