My lawyer has gone out of business
What does this mean for your complaint?
It depends on the type of firm. In order to work as a solicitor in Scotland, you must have a ‘practising certificate’. There is more information on this on the Law Society of Scotland website.
Legal businesses in Scotland usually have one of the following structures:
- Sole practitioner: A business that is owned and run by a single solicitor.
- Partnership: Two or more people running a business together .
- Limited Liability Partnership (LLP): A legal arrangement where a business run by two or more people has its own legal identity. This legal identity is different from that of the individual partners. The LLP can carry out ‘any lawful act’ carried out by a traditional partnership.
- Limited Company - A business that has its own separate legal identity and is controlled by one or more directors rather than partners.
If your solicitor is no longer in business or the firm has closed down, usually you can still make a complaint.
The exception is if you want to complain about a sole practitioner (i.e. a business that is owned and run by a single solicitor) who has died before we’ve made a formal decision on whether to accept or reject your complaint being made. If this has happened, we won’t be able to take your complaint any further.
- Yes this is almost always required, otherwise your complaint to the SLCC will normally be rejected as ‘premature’.
- If you do not have up to date contact details for the solicitor or firm, please contact us and we can try and help you in getting in touch with them.
- If the firm has been sold or taken over, we should also be able to tell you who is now responsible for dealing with complaints against the solicitor or firm. (This is also the case if a ‘trustee’ has been appointed to run the firm).
- For further information about how to make a complaint, see here: Getting started
This depends on the structure of the firm and the details of any sale/merger. In the case of a sole practitioner, the individual solicitor is responsible for paying.
If it's a partnership, the individual partners are ‘jointly and severally liable’. This means that the partners are fully responsible equally for paying. A claim may be made to any of the partners - it is up to all the partners to sort out their share of the liability.
For Limited Liability Partnerships (LLPs), the LLP as a business is responsible for paying, regardless of which individual partner is responsible.
If it's a Limited Company, the business as a whole is responsible.
It’s unlikely that you will get the full payment and you may not get any payment. However it depends on the structure of the business:
If they have been made bankrupt, they will almost certainly have more debts than money to meet the debts. It is unlikely that you will receive full or even partial payment of any payment ordered.
This depends on the number of partners within a firm. If an individual partner is ‘sequestrated’, this means they will almost certainly have more debts than funds or assets to meet the debts. It is unlikely that that you will receive full or even partial payment of any payment ordered from the sequestration process.
However, the other partners of the firm would be responsible for paying.
If the partnership as a whole is sequestrated, it is unlikely that that you will receive full or even partial payment of any payment ordered.
Limited Liability Partnership (LLP)
If an individual partner is sequestrated, this will not affect recovery of any payment ordered.
If an LLP is entering ‘administration’, there is a high risk that there won’t be enough money to meet any payment ordered.
Even if some money can be paid, it is likely to take a number of years and only be a tiny amount of what’s due.
When a company enters an insolvency process, any SLCC payment ordered will be treated as an ‘unsecured’ debt. This means that other debts will be paid off first.
It is unlikely that the money will be paid and even if it is, it will probably take several years and only be a tiny amount of what’s due (such as a few pence for every pound that is due).
- In some situations it might be possible for a firm to make a claim on their insurance policy to cover a payment of compensation ordered by the SLCC.
- In Scotland, there is compulsory professional indemnity insurance for solicitors in practice in Scotland called the ‘Master Policy’. This Policy is arranged by the Law Society of Scotland and provides cover up to £2 million for any one claim.
- The Master Policy insurance provides cover for dishonest, fraudulent, criminal or malicious acts or omissions involving clients’ funds. It also covers claims for professional negligence and sometimes, legal fees.
- The Master Policy insurance might cover a payment for a refund of fees but this will depend upon the particular circumstances and whether the claim meets the requirements of the Policy.
- Further information about the Master Policy is available here: Law Society of Scotland website
- In addition, there is a ‘Client Protection Fund’. This exists to protect clients from financial loss resulting from a solicitor or member of staff acting dishonestly. Generally the fund does not repay fees. The fund is set up to be a ‘last resort’ – only available when everything else has been tried. There are also some specific requirements which must be met before making any claim.
- It doesn’t affect your right to make a complaint and in the end, it’s your choice. We will assist you where we can in trying to make sure you get any compensation or fee refunds that we might order. However, the complaints process is likely to take longer than normal and it may be difficult to get any payment from the practitioner/firm if your complaint is upheld.
- We are not legally responsible for making up the difference in any sums due to you. We know that it’s frustrating and disappointing for you when the compensation or refunds we have ordered aren’t paid.
- We have raised this issue as part of the ongoing discussion on reforming legal regulation in Scotland.