Firm closing

[Banker]

37 minutes ago, The Duck of Atholl said:

I would imagine that the debts will relate to the business office account and not the client account. There are very strict rules about use of client account money in law firms and any abuse is potentially a strike off and possiby jail time

James has already started a new firm with just him

[The Phantom]

11 hours ago, NoTailT said:

I’m pretty sure someone told me they owed a few hundred thousand to ITD.

Must be something like that. They are a law firm, they don't exactly have stock or suppliers. Realistically they just sell the time of the lawyers. 

[NoTailT]

3 hours ago, The Phantom said:

Must be something like that. They are a law firm, they don't exactly have stock or suppliers. Realistically they just sell the time of the lawyers. 

I imagine the liquidators will be looking closely at the creditors and conduct of directors, as they should.

[Roger Mexico]

13 hours ago, Banker said:

Bit more detail on Quinn debts 

https://www.iomtoday.co.im/news/closed-law-firm-has-debts-of-ps800000-640478?fbclid=IwAR1-rDo7iz900jy1z5e9Js834PpOv28yswPaUJ4HCMZnLkCZRNjiD0JL2Ko

The phrase about "the company was unable to pay its debts as they fell due" [my bold] certainly suggests something like VAT or IT/NI due to the Treasury.  Certainly the amount is large enough to make that the most likely possibility.  The other option would be something like money owed to other lawyers (eg UK barristers) for services, but those tend to be fairly aggressive in making sure they are paid as soon as possible.

Of course in the olden days, lawyers and similar professionals were unable to operate through limited companies and partners were personally responsible for the debts that such operations incurred.  How the world has improved!

[Gladys]

2 minutes ago, Roger Mexico said:

The phrase about "the company was unable to pay its debts as they fell due" [my bold] certainly suggests something like VAT or IT/NI due to the Treasury.  Certainly the amount is large enough to make that the most likely possibility.  The other option would be something like money owed to other lawyers (eg UK barristers) for services, but those tend to be fairly aggressive in making sure they are paid as soon as possible.

Of course in the olden days, lawyers and similar professionals were unable to operate through limited companies and partners were personally responsible for the debts that such operations incurred.  How the world has improved!

The bold is just the standard Company law definition of insolvency. 

[NoTailT]

2 minutes ago, Roger Mexico said:

The phrase about "the company was unable to pay its debts as they fell due" [my bold] certainly suggests something like VAT or IT/NI due to the Treasury.  Certainly the amount is large enough to make that the most likely possibility.  The other option would be something like money owed to other lawyers (eg UK barristers) for services, but those tend to be fairly aggressive in making sure they are paid as soon as possible.

Of course in the olden days, lawyers and similar professionals were unable to operate through limited companies and partners were personally responsible for the debts that such operations incurred.  How the world has improved!

These figures can become compounded though don't forget. Say they fell behind £60k on their rent - @John Wright can correct me here - but the landlord couldn be claiming for a further 12 months rent and dilpidations. So that 60k could soon become £200k on the creditors.

[Nellie]

Looks like he'll go down in Manx Folklore as the first person to manage to lose a fortune running a legal practice. 🤣

[John Wright]

2 minutes ago, NoTailT said:

These figures can become compounded though don't forget. Say they fell behind £60k on their rent - @John Wright can correct me here - but the landlord couldn be claiming for a further 12 months rent and dilpidations. So that 60k could soon become £200k on the creditors.

I’m not going to comment on James’s misfortune.

But law firms, generally, are expensive to run.

Staff, rent, indemnity insurance ( I’ve not had a claim against me since I set up my own home office practice but it’s costing me 15% of my fee income ), IT, library.

In a company liquidation If there are rent arrears they are a preference. If the liquidator surrenders the lease as onerous ( no income, no ability to pay ) then that’s it.

Clients may not pay as and when they should, or at all.

The rules provide that an advocate can’t take money for himself if it’s been paid for disbursements for experts or counsel. It has to go into client account until paid.

What sort of thing can push a law firm into insolvency?

Work in progress not actually being realised at full value for billing.

Unprofitable work.

Too many/too expensive staff

Big flash expensive offices

Doing no win no fee ( where allowed ) and losing most of the cases.

Withdrawing more from the business in partner or director loans than the business can afford.

Clients defaulting on what they owe

[piebaps]

15 hours ago, TheTeapot said:

Wasn't he due in court for something creepy?

No- that was someone with a similar name.

[The Phantom]

16 minutes ago, John Wright said:

I’m not going to comment on James’s misfortune.

But law firms, generally, are expensive to run.

Staff, rent, indemnity insurance ( I’ve not had a claim against me since I set up my own home office practice but it’s costing me 15% of my fee income ), IT, library.

In a company liquidation If there are rent arrears they are a preference. If the liquidator surrenders the lease as onerous ( no income, no ability to pay ) then that’s it.

Clients may not pay as and when they should, or at all.

The rules provide that an advocate can’t take money for himself if it’s been paid for disbursements for experts or counsel. It has to go into client account until paid.

What sort of thing can push a law firm into insolvency?

Work in progress not actually being realised at full value for billing.

Unprofitable work.

Too many/too expensive staff

Big flash expensive offices

Doing no win no fee ( where allowed ) and losing most of the cases.

Withdrawing more from the business in partner or director loans than the business can afford.

Clients defaulting on what they owe

Probably a combo of some big clients not paying up on time, plus maybe rent and taxes due all the same time.  Pretty much the same scenario took down an Architect's a few years ago. 

[CrazyDave]

It’s a strange forum this.

Why would a group of people make guesses about and even joke about why someone’s business has failed.  Openly speculating about something that will be a very low point in someone’s life, and for all we know might be out of their hands.

Its pretty unpleasant really.

[paswt]

6 minutes ago, CrazyDave said:

It’s a strange forum this.

Why would a group of people make guesses about and even joke about why someone’s business has failed.  Openly speculating about something that will be a very low point in someone’s life, and for all we know might be out of their hands.

Its pretty unpleasant really.

Unpleasant? perhaps but if you have had seen  the  way this company has behaved and made someone's life a misery for a couple of years making ludicrous assertions and claims before dropping the action it's entirely understandable IMO .

The individual concerned was representing himself and would have been ruined and lost everything .

Hope this helps

 

[Cueey Lewis And The News]

25 minutes ago, CrazyDave said:

Its pretty unpleasant really.

Like most content here. 

[Barlow]

And spending more than the average time in the pub can only account for so much, so it's not really a factor.

[TheTeapot]

2 hours ago, piebaps said:

No- that was someone with a similar name.

Thanks for pointing this out! Otherwise I might have been walking round thinking that this was the lawyer chap.

https://www.manxradio.com/news/isle-of-man-news/trial-for-douglas-man-accused-of-indecent-assault/

I remain unconvinced that the press reporting on people being charged with a crime is a good idea. Can lead to all sorts of assumptions.