Ex-clients of collapsed PI firm pay thousands in wasted costs
dministrators have successfully pursued former clients of a collapsed firm for £38,000 in wasted costs, it emerged this week.
An update into the clear-up from the closure of Southport firm J C and A Solicitors Limited shows that administrator Leonard Curtis and a debt-chasing specialist have realised significant sums from closed case debtors.
As previously reported, personal injury firm JC & A had mounted a seven-month campaign prior to its administration in December 2018 to recover wasted costs payments from ex-clients. It was estimated at the time this could raise £1.4m from 3,000 initial requests, but the policy stopped after a number of complaints were made to the Solicitors Regulation Authority.
The firm had largely relied on RTA claims that could be processed in bulk and at one stage employed 150 people. It had been estimated at the end of 2017 that more than 10,000 matters were discontinued prior to completion due to actions by the client
Following their appointment, the joint administrators entered into an asset purchase agreement with Vertill Limited, which specialises in pursuing matters discontinued prior to completion by clients – for example not attending medical appointments or non-return of paperwork.
Vertill accounted for between 10% and 30% of the costs and disbursements recovered, with £38,000 recovered to date. Realisations are ongoing, with further updates provided in future progress reports.
The recovered wasted costs will go towards paying off secured and unsecured creditors. Administrators have also secured around £500,000 from debts relating to work in progress, with a further £115,000 from recovery of disbursements.
The monies recovered have ensured all staff have been paid wages up to the date of redundancy, as well as outstanding pension contributions. The number of unsecured creditors is not specified, nor is it explained how much they will receive from the administration process, but they are expected to receive a dividend of some sort.
The administrators’ report identifies a number of significant extra costs incurred since their initial update a year ago. These include consultancy fees of £79,000 and an additional £39,000 incurred by Leonard Curtis Legal for solicitor manager costs.
Overall, administrators are expected to be paid more than £300,000 in fees pre-appointment fees and remuneration, with a further £57,000 incurred on solicitors’ fees and expenses.
Article By John Hyde 10 July 2020 published in The Law Society Gazette