PM Law's sudden closure leaves staff and clients in limbo

BBC Business (Finance) Senior Financial Correspondent

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The abrupt closure of PM Law, a prominent Sheffield-based legal practice, has sent shockwaves through the regional legal community, leaving hundreds of clients and a significant number of employees in a state of profound uncertainty. The firm ceased trading with immediate effect this week after the Solicitors Regulation Authority (SRA) took the decisive step of an 'intervention'.

This regulatory action is one of the most severe sanctions available to the SRA, reserved for instances where it deems urgent action is necessary to protect the public, client assets, and the integrity of the legal profession. It effectively means the SRA has taken control of the entire practice.

In a statement explaining the mechanism, the SRA detailed the gravity of the process. An intervention means "we take possession of all documents and papers held by the firm, take possession of all money held by the firm (including clients' money), and, where a firm is still trading, close it with immediate effect".

The specific reasons for the intervention into PM Law have not yet been made public, which is standard procedure in the initial stages. However, SRA interventions are typically triggered by serious concerns, such as suspected dishonesty, breaches of accounting rules, or a failure to protect client money.

The Immediate Fallout

The sudden shutdown has created a chaotic and distressing situation for all parties connected to the firm. Staff reportedly arrived at the firm's city-centre offices to find them sealed, with notices from the SRA posted on the doors.

For the firm's extensive client base, the closure freezes all active legal matters, from property transactions on the verge of completion to ongoing litigation and the administration of estates.

Consequences for Clients and Staff

• Client Cases Halted: All ongoing legal work, including conveyancing, personal injury claims, and wills and probate services, has been stopped. This leaves clients mid-transaction, potentially causing significant financial and personal disruption.
• Frozen Funds: All money held by PM Law in its client accounts is now under the control of the SRA. This includes funds for house deposits, inheritance distributions, and litigation settlements.
• Staff Redundancy: The firm's employees, estimated to be over 100 individuals, are now effectively unemployed. They face the immediate challenge of seeking new employment with no notice period.
• Uncertain Communication: Clients and staff have been left with limited information, directed only to the SRA and its appointed agent for any updates.

Background on PM Law

Founded over two decades ago, PM Law had established itself as a major player in the South Yorkshire legal market. The firm was particularly well-known for its high-volume conveyancing department, handling thousands of property transactions annually across the UK.

Alongside its property work, the practice also had departments dealing with personal injury, medical negligence, and private client services like wills and probate. Its growth had been a regional success story, expanding its workforce and footprint significantly in recent years. This scale makes its collapse all the more impactful.

The Intervention Process Explained

An SRA intervention is not a bankruptcy or administration proceeding but a direct regulatory takeover designed to safeguard client interests. The SRA has appointed another law firm, Gordons LLP, to act as the "intervention agent".

The role of the intervention agent is critical in managing the aftermath of the closure.

Responsibilities of the Intervention Agent:

• Securing Files: Gordons LLP is tasked with collecting and indexing all of PM Law's client files and documents. This is a monumental logistical task given the firm's size.
• Client Communication: The agent will attempt to contact all of PM Law’s clients to inform them of the situation and provide guidance on how to proceed with their case.
• Managing Funds: The agent will work with the SRA to identify and manage the client money held by the firm, with the ultimate goal of returning it to the rightful owners.

The SRA has stressed that the intervention agent's role is not to take over the legal work but to manage the orderly transition of files and funds. Clients will need to instruct new solicitors to continue with their cases.

What Happens Next?

The closure of PM Law initiates a complex and potentially lengthy process for everyone involved. The immediate priority for the SRA and its agent is to secure the firm's assets and begin the process of communicating with clients.

A Roadmap for Those Affected:

• For Clients with Ongoing Cases: You will need to find a new law firm to take over your case. The intervention agent will provide details on how to retrieve your file so it can be passed to your new solicitor.
• For Clients Owed Money: If the funds held by PM Law cannot be fully accounted for or returned, clients may be able to make a claim to the SRA Compensation Fund. This fund exists as a safety net to mitigate financial losses caused by regulated law firms.
• For Former Staff: Employees will need to register as creditors for any unpaid salary or redundancy pay. They are now free to seek employment at other firms, though the sudden nature of the closure puts them in a difficult position.
• For the Firm's Partners: The SRA's investigation into the circumstances leading to the intervention will continue. This could result in disciplinary proceedings or further legal action against the individuals responsible.

The collapse of a firm of PM Law's size serves as a stark reminder of the stringent regulatory environment in which law firms operate and the severe consequences of failing to meet those standards. For the hundreds of individuals and families now caught in the crossfire, the coming weeks will be a period of intense uncertainty as they navigate the legal and financial implications of this sudden and dramatic failure.