Administrators agree law firm sale

Paul Shenton, managing director of Just Costs

A law firm has re-emerged as a phoenix after it collapsed under the weight of historic debts and a CVA.

46 jobs have been saved at Just Costs, which is based in Manchester city centre and has a London office. At its peak three years ago it employed more than 100 people and also had offices in Leeds and Chesterfield. The solicitors’ costs firm specialised in commercial litigation, clinical negligence and claimant personal injury.

The business operated through three companies – Just Costs Budgets and Just Costs Management, which appointed FRP Advisory as administrators in August, and Just Costs Ltd, which had entered into a CVA in October 2016 before Begbies Traynor became administrators today.

The deal is a result of work between the company, the Solicitors’ Regulation Authority (SRA), major creditors NatWest and Close Brothers, lead restructuring advisor James Ritchie and the administrators. A successful resolution was made more difficult by client confidentiality issues, regulation and the fact that only a solicitor or administrator can legally trade a solicitor’s practice.

Managing director Paul Shenton, who has retained control through the vehicle Just Costs Solicitors, said: “This transaction enables the new company to focus on providing their hundreds of solicitor and institutional clients with the market leading service they have come to expect over the last 11 years.

“There will no longer be the burden of substantial historical financial liabilities.”

Shenton, who set up Just Costs in 2006 after 13 years with Eversheds, is one of three directors of Just Costs Solicitors Ltd. It has been authorised by the SRA and has acquired all the assets, files, outstanding work in progress and invoices from the three companies.

Shenton is joined on the board by solicitors Jodi Booth and Adam Quinn, while Eric Golding has become non-executive chairman and James Ritchie has also joined the board. Mark Hartigan, Just Costs’ former client services director who held a 25% stake in Just Costs Ltd, had stepped down as a director in April.

Just Costs Ltd went through a CVA last year after becoming burdened by a £780,000 debt to HMRC, plus further debts of nearly £50,000.

It had agreed to repay more than £33,000 a month for two years, but was unable to maintain payments.

Paul Stanley, Begbies Traynor’s North West managing partner

Paul Stanley, Begbies Traynor’s North West managing partner and joint administrator of Just Costs Ltd, said: “The changes brought in by the Jackson Reforms to the legal system have had a well publicised effect in the legal market especially in the personal injury claim arena. We have dealt with many such practices over the past few years.

“There has been a big negative cash flow impact on companies such as Just Costs which required a change in business model and funding structure.”

The Jackson Reforms were introduced in 2013 changes and reviewed civil litigation costs, which included introducing a proportionality test to lawyers’ fees.

Paul Stanley and Paul Barber of Begbies Traynor were joint administrators of Just Costs Ltd. David Thornhill and Ben Woolrych of FRP were joint administrators of Just Costs Budgets and Just Costs Management.

Alex Megaw and Gary Black of Freeman Fisher provided legal advice to Just Costs and Tim Taylor of Addleshaw Goddard acted for the administrators.

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