Donns LLP in administration

26 March 2012

Donns LLP, a personal injury compensation law firm, based in Manchester  has gone into administration.  PricewaterhouseCoopers are the administrators. The firm had  offices at City Wharf, in Manchester. 

 The most recent accounts for Donns LLP said that the firm's liabilities exceeded its total assets by £5.5m. The firm was attempting to renegotiate its banking facilities at the time.  Another Manchester based law firm, Irwin Mitchell,  has bought “several hundred” personal injury cases from the stricken firm in a deal with the administrators.  The firm can now write to all the clients and advise them that their cases can be continued.So how come law firms such as Donns LLP can get into trouble?  The simple fact is cashflow.  Much work done by lawyers is only paid once the case goes to court and the outcome determined.  In no win no fee cases the firm has to take out an insurance policy to get paid if they don't win.Also lawyers are notoriously bad at chasing debts for the simple reason that the time spent is not "billable time"  Consequently they can end up with huge amounts of work in progress but not actual money in.So how can lawyers get help if they face cashflow issues.  Well, the first step would be to look at our help for struggling lawyers webpages.