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Lawyer avoids professional disqualification
Many professional bodies have strict rules if a member becomes bankrupt — often they lose their practising certificate and thus their livelihood.
A recently qualified solicitor who was a junior salaried partner in a well — known law firm consulted us. About a year earlier, he and two colleagues had decided to leave the firm to set up their own practice. In order to keep the breakout confidential, it was informally agreed that he would take all the practical steps in setting up the new firm.
Our client had therefore acquired leasehold premises in his own name and incurred other substantial costs. Just when everything was ready, his colleagues changed their minds. The solicitor had not entered into any binding agreement with his prospective partners and when they reneged on the informal one, he found himself liable for substantial debts and obligations. His 'disloyalty' meant he was asked to leave the firm and in the aftermath of trying to keep afloat, his wife also built up substantial debts.
Breaking point
Just as he was facing bankruptcy with the resultant loss of his livelihood, our client was able to get another position as a salaried partner. Now with a reasonable joint income and our help and guidance, he and his wife proposed joint but interdependent Individual Voluntary Arrangements (IVAs) to their creditors. Agreement was also reached with the Law Society that an IVA would enable our solicitor to retain his professional licence since his financial problems did not involve loss of client monies or professional malpractice. This agreement enabled him to continue in his profession as a solicitor. The creditors agreed to the plan that our client and his wife would make monthly payments over five years in full and final settlement of their debts.
Securing a better future
The outcome was a dividend of about 60 pence in the Pound for creditors. The solicitor himself is now a successful equity partner in a firm specialising in criminal law and has even become a TV and radio legal pundit. Had he been made bankrupt, the Law Society would have withdrawn his practising certificate and he would have been unable to maintain a living in the profession. As it was, he and his wife were not only able to maintain a reasonable lifestyle — albeit a little tighter than they might have wished — but they retained the matrimonial home which on bankruptcy would almost certainly have had to have been sold.
