There may be a perception that professional services firms are more sheltered from insolvency than other sectors – however, a growing number of insolvencies would suggest they are far from immune to financial pressures.

Professional services companies include lawyers, accountants, architects, consultants, engineers, and surveyors. It also encompasses financial services firms, such as independent financial advisers, financial planners, and insurance brokers. Any firm that earns its income from knowledge-based services fits into this category.

Because this is such a diverse sector, insolvency can stem from many different causes.

Here at Company Debt, we have significant experience in both closing and restructuring professional services businesses. Get in touch for a free, no-obligation discussion about your situation with one of our licensed insolvency practitioners.

Professionnal Services Pressure Points

Some firms already over extended
Fee income may have fallen
Low capital reserves in partnerships

What are the Reasons for Professional Services Insolvency?

The effects of the pandemic will have had differing impacts on professional services firms, and for many, could have resulted in less work and the burden of high fixed costs. It could be that a business was already over-extended prior to the pandemic, perhaps from acquiring another business, and is now at an increased risk of insolvency, because of the reduction in fee income. Taking the example of solicitors, some may have done well if they specialised in employment law, for example, whereas those focused on M&A work could have experienced a big drop-off as businesses chose to put this on hold.

Professions services firms that are partnerships could also be more vulnerable to insolvency since they will distribute profits to the partners each year and maintain relatively small capital reserves, which can make a financial shock harder to cope with.

Firms can also run into trouble if they have been involved in riskier areas of business, where there has been regulatory involvement, for example. A case in point could be IFAs who dealt with pension transfers – a risky area that in some cases left the client worse off.  Where there are likely claims against a business for malpractice, much of the value is lost and such firms can be impossible to sell and so may need to liquidate. Professional services firms of all sizes and disciplines will fail on occasion, whether from their own wrongdoing or misjudgment or perhaps because of an external factor such as a property crash or cancellation of work. The only certainty is there can be no certainties in business

Help for your insolvent professional services business

If your professional services business is experiencing difficulties, you should not delay seeking advice. Business owners need to address problems and if they put this off, then their options become more limited.

Company Debt provides expert support and advice on the next steps for an insolvent business, whether rescue, recovery, or liquidation.

Knowledge – Insight – Solutions

We are fully licensed and accredited insolvency practitioners based in north London, and with decades of combined partner experience in helping directors find positive solutions to business challenges.

Our goal is first to understand your situation as fully as we can, and then to explain the range of options available to you.

We focus on practical advice, without jargon. We practice total transparency around costs and fee structures. Our wish is to support you as fully as possible so that you can emerge from this situation in the best possible situation.

As a first step, simply book in a call with one of our team to learn more about our approach, and to take advantage of a fee consultation that carries no obligation.

Book My Consultation

If you need an experienced insolvency practitioner or business rescue specialist, seek advice now.

  • Your free consultation will be led by one of our experienced London insolvency practitioners
  • You can speak via phone, online meeting or in person so that we can listen carefully to the facts about your situation
  • The team will provide a preliminary view of the likely best outcome, proposed strategy, and the likely cost
  • We specialise in helping limited comany directors needing immediate professional debt advice

 

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