Resignations led to law firm being sold in pre-pack deal
A rash of resignations by senior fee-earners along with a decline in the percentage of conversion of leads led to a Nottingham law firm entering administration in November.
AKHQ Limited, trading as April King Legal, was sold in a pre-pack deal last month after Begbies Traynor was called in as administrator.
Documents seen by TheBusinessDesk.com outline that April King embarked on a national expansion programme in February 2018. The firm rented services offices across the Midlands and Manchester and began advertising in the national press. Turnover grew to around £200,000 a month.
However, the expansion saw the firm incur additional expenses after bosses took on additional leasehold premises below its head office in West Bridgford, Nottingham, which gave it a high street presence.
In Q2 and Q3 of this year, several high profile fee earners quit April King legal, which, according to administrators, reduced morale among remaining fee-earners. The satellite offices were closed with advisers working out of the West Bridgford office. By September, conversion of leads had dropped from an average of 66% to 47%.
The situation led to the company building up debt, including almost £200,000 owed to HMRC with the threat of legal action from creditors, despite owner Paul King pumping cash into the business. Administrators say several staff were made redundant during this time.
On 15 November, AKHQ was sold in a pre-pack deal to April Legal Limited, also owned by Paul King.
At the time of entering administration, AKHQ owed £538,182.98 to unsecured creditors. A statement from Begbies Traynor said: “Based upon realisations to date and estimated future realisations it is expected that there may be sufficient funds available to enable a dividend to be paid to the unsecured creditors. The exact quantum and timing of which is not yet known.”
An administrators report show that among AKHQ’s creditors are Lavery Rowe Advertising, which is owed £170,888, Reach Publishing Services, which is owned £20,000 and AK Midlands of Derby, which is owed £20,061.32.
Last week, Paul King said: “We are pleased to be able to offer continuity of service to our valued clients. Moving forward, our focus will be on investing in our team with ongoing training, as well as using technology to help us do things more efficiently and effectively.
“We’re excited about the future. After a long period of consultation, new rules from the Solicitors Regulatory Authority make it possible for solicitors to provide their services on a freelance basis, which gives us access to a much wider pool of talent. This provides an opportunity to grow our team in a more flexible way and one that responds directly to the needs of our client base.”
