Protecting legacy income from the decline of the high-street firmMay 21, 2020
Kelly Marie Braund, Solicitor and Legacy Administration Manager at Diabetes UK, looks at some simple steps that legacy professionals can take in light of changes to the high street…
At the Excellence in Legacy Administration Conference last year, we were already discussing the future of high street law firms; considering what the future of the Wills and Probate legal sector would look like and how it would affect charities as high street firms appeared to be in decline.
Unfortunately, the outlook has only worsened with the COVID-19 pandemic, as high street firms are disproportionately affected by lockdown.
Now the Law Society suggests that thousands of high street and sole practitioner firms may shut within six months, and firms themselves are concerned that Covid-19 pressures could put them out of business by the autumn.
With many of our files being handled by smaller firms, this obviously poses a risk to our legacy income. So what small steps can charities do to make ourselves more robust, to prevent being unduly impacted when a law firm handling the estate administration goes into administration?
- Write out as soon as you receive a Smee and Ford notification, rather than waiting: We usually wait three months to write out following a Smee and Ford notification, but we’re currently considering being more proactive. Getting in there early means you are more likely to extract information about the file whilst firms are still active. Building a rapport also means they are more likely to tell you if things are likely to change.
- When setting up or adding information to a new file, make a note of company/SRA numbers: this will help you to check against insolvency or intervention listings if your file becomes inactive for a while.
- If your file is already underway, push for up-to-date schedules of assets & liabilities or estate accounts: we all know how valuable this information is to us, but especially so at the moment. Accurate valuations act as a benchmark, allowing us to evaluate against future valuations and working out losses if there are delays, ensuring assets don’t get forgotten in any file handovers, or helping to efficiently take over the administration where necessary.
- We are all looking to improve our cash flow with interim distributions at the moment: but the added bonus is that the more funds that have been distributed, the less will be tied up whilst files are transferred, applications made or administrators bought in. If solicitors are holding estate funds, then they should be offering interim payments so don’t be afraid to ask.
- If you have the capacity, you might want to consider carrying out more regular reviews: Identifying those files with small firms and keeping in touch may allow you to spot the warning signs and get some extra interim distributions.
- Remember: always be polite, positive and cooperative: if a firm is struggling, its staff are likely to be under a lot of pressure; working longer to make extra billable hours, concerned about their futures, all whilst struggling with lockdown. Whilst we obviously have to keep our charities’ best interests in mind, working collaboratively tends to get the best out of everyone.
And if a firm that you are dealing with does go into insolvency, check out the article from last week on steps that you might consider to pass over or remove an administrator (click here to read the article – ILM members only).