Difficulties with your practice
Closing your practice – advice for a recognised sole practitioner
You may find it helpful, from a personal point of view, to contact our Professional Ethics helpline or the Law Society's Pastoral Care Helpline. Professional Ethics offers advice about our rules of conduct; the Law Society's Pastoral Care Helpline provides help with personal, financial, professional and employment problems. They both provide confidential advice.
Contact your local law society. It might offer support and/or be able to introduce you to firms interested in amalgamating with or acquiring your practice.
If you are already on the brink of serious issues, please contact us to tell us of your difficulties. We need to be informed, so that we can ensure clients' interests are being protected. We are unable to send someone out to help run your practice.
To protect the interests of your clients, you could consider
- using the services of a locum solicitor or registered European lawyer until you feel you can cope,
- winding down your practice,
- amalgamating/merging with another practice, or
- disposing of your practice.
Your responsibilities
It remains your responsibility to ensure that your practice is either properly run or closed down. Guidance about practical steps you need to take—for example, notifying clients—is available from our Professional Ethics helpline at any stage.
You must still deliver accountant's reports to cover the period you continue to hold clients' money.
As a last resort, we might consider intervening into your practice. It is better for you and for your clients if you can resolve the situation without an intervention. An intervention is likely to be worrying for your clients, and will have costs consequences for you.
Accountant's reports
The relevant date for delivery
You must deliver a report for an accounting period within six months of the end of the accounting period.
If you stop holding client's money or close your practice, the relevant date for the accounting period is the date you cease to hold client money, not the date you cease to trade.
Application to extend time to deliver report
You can apply in writing to us for an extension of time to deliver the report. You must apply, with reasons, before the report is due. However, there is no guarantee we will grant an extension.
Application for a waiver from the requirement
You can apply in writing to us for a waiver from the requirement to deliver a report. We advise you apply before the report is due. You will need good reasons and evidence (bank statements) to show the level of activity on your client account. There is no guarantee we will grant a waiver.
Bankruptcy
What you need to know
If you enter into bankruptcy, your practising certificate or registration will be suspended. You cannot then practise or hold yourself out as a solicitor or registered European lawyer (REL) or registered foreign lawyer (RFL).
If you are a solicitor or RFL, you can apply for the suspension of your practising certificate or registration to be lifted. If you are likely to be made bankrupt, let us know immediately. Any application you make for suspension of your PC or registration to be lifted can only be considered once bankruptcy has occurred.
There are steps you must take to protect your clients before your bankruptcy.
If you are unable to make proper arrangements to protect your clients' interests, we may need to intervene in your practice—this is a last resort.
During bankruptcy, you cannot handle client accounts. You can ask another solicitor or registered European lawyer (REL) to assist you by authorising withdrawals and transfers. Client account does not form part of your estate in bankruptcy, and does not pass to the trustee.
Steps you must take
In all cases, you must
- stop practising, unless the suspension is lifted, and
- inform us of your bankruptcy immediately.
If you are a manager , you must also
- tell your partners, directors or members, and
- make arrangements to step down as a manager.
If you are a recognised sole practitioner, you could
- arrange for clients to go to another firm,
- merge with another firm and apply for permission to work there, or
- dispose of your firm and go to work elsewhere.
If you are an assistant, you must tell your employers.
How to apply for suspension to be lifted
To apply for the suspension of your practising certificate or registration to be lifted, write to us or email us.
Please tell us what your plans are for after you are bankrupt, so we can take these into account.
What we will do when you apply
We will deal with your application as quickly as possible.
It is probable that we will lift the suspension but impose conditions on how you practise.
Conditions are likely to require you to work
- as an assistant or a consultant,
- for an approved employer, and
- without handling client money.
As a bankrupt, you are unlikely to be allowed to become a recognised sole practitioner, owner or manager of a recognised body.
You can appeal a decision to refuse to terminate the suspension or any conditions imposed.
Appealing a decision
If you disagree with the decision, you can either
Your appeal must fully state the reasons for your disagreement with our decision.
If you appeal to us, you can lodge your appeal by emailing us or writing to us.
What can happen on appeal
We can vary the first instance decision.
The decision on appeal might improve or worsen the outcome from your point of view.
Involuntary individual arrangement (IVA) – what you need to do
If you enter into an IVA, your practising certificate or registration will not be suspended.
If you are considering entering into an IVA, or have done so, you should notify us, explaining when you are likely to enter into the IVA/PVA.
What we will do
We will consider whether to impose conditions on how you may practise once you enter into an IVA/PVA.
Conditions may involve you being able to work
- as an assistant,
- as a consultant,
- as a manager of somewhere we have approved,
- while having to deliver accountant's reports twice a year,
- with restrictions on handling clients' money.
How to notify us you are entering an IVA
You must notify us by writing to us.
If you are currently working as a solicitor, REL or RFL tell us what your plans are, as we can take them into account.
Send us a copy of your IVA/PVA when you have it.
Once you have notified us, we will consider whether to impose conditions in respect of your practising certificate or registration.
Shortages caused by dishonest managers or employees - your duty
Running a deficient client account is a breach of trust. It is, therefore, critical that any shortage is replaced immediately.
If you are a manager or recognised sole practitioner you have a duty to replace a shortage even if you are an innocent party. To do this you should:
- Use your own or borrow resource and/or
- Make a claim on your insurance
Making a claim against insurance
If you make a claim from your insurer ensure it is a legitimate claim under the Solicitors' Indemnity Insurance Rules 2011.
Satisfy yourself that all managers making the claim had no knowledge of the wrongdoing.
Inform your insurer of your professional obligation to replace the deficit.
Making an application for a grant from the Compensation Fund
If you are unable to make good the loss from your own or borrowed resources, or by making a claim on your insurance or by any other means, you may make an application for a grant from the Compensation Fund.
A grant is discretionary, is usually an interest bearing secured loan and will therefore, generally, need to be repaid.
All recipients of the grant must satisfy us they are fit and proper; they must not have been implicated or have had any knowledge of the wrong doing. You will also be required to supply full details of your income, assets and liabilities.
For further advice and help please contact us.