A handy guide.
The Metamorph law group's turbulent restructuring descended into chaos this week as the company, which owns a network of firms, failed to prevent the court appointment of an official receiver for parts of its business, resulting in staff being made immediately redundant, and prompting disbelief amongst employees that the SRA has not stepped in.
Creditors, understood to be HMRC and an estate agents, had issued winding up petitions in respect of Metamorph subsidiaries BPL Solicitors and MLL Limited, which operates Linder Myers, SLC Solicitors, and Donnelly & Elliot Solicitors.
Metamorph's board planned to liquidate the two companies after transferring their assets to Knowles Benning, a Bedfordshire firm it acquired in the summer. Last Friday the Metamorph board told staff in an email leaked to RollOnFriday that it was making "good progress" with the restructuring, and on Monday MLL and BPL staff moved across via TUPE.
However, this week staff were not paid and on Wednesday the board revealed that "unexpectedly the Official Receiver was appointed as the liquidator of MLL Limited today", which "has caused a temporary slowing of our transfer arrangements of funds across to Knowles Benning to enable us to pay your salaries".
Multiple sources said the official receiver was also appointed in respect of Metamorph Group Services Limited, which manages the support functions for several of the group's firms. "None of the Metamorph Group Services staff had been TUPE'd across" said a source. As a result, "HR, payroll, client account staff, accounting staff - everyone's been made redundant". Another employee said it meant "those who transferred from MLL to Knowles Benning have no HR, no compliance, no finance teams". Staff also found themselves unable to get into offices, which had been locked shut.
An employee at another impacted Metamorph company said that some Metamorph Group Services staff had been offered their positions back, along with their November paycheck as an inducement not to walk away. The emergency rehiring strategy meant that "we do technically have an accounts team again", said an insider, although "we don't actually have an up-and-running client account", which they said raised questions about compliance.
A source in a senior role said, "We have money in client account that we can't process. We can't make court payments because none of our accounts team are there". Another lawyer said, "If we were to settle a PI claim, how would we be able to get the client their settlement? We don't have access to the account."
Staff reacted with disbelief to the suggestion that there had been no compromise to clients. "There's no compromise when your court account is frozen, when your franking machines are frozen, when you can't move client money, you can't invoice, you've got no accounts team? How is it the case that clients aren't compromised?"
There was incomprehension as to why the regulator had not stepped in. "We don't understand it", said one lawyer. "How the SRA are not involved is beyond me. I can't wrap my head around it", said another source.
An SRA spokesperson said, "All firms have an obligation to close in an orderly way as laid out in our guidance. If we become aware that a firm is not adhering to our rules, then we can step in".
The board has told staff it now intends to replace the official receiver with the group's preferred liquidator "who has already been appointed to the other companies in the restructure". In the meantime, it told staff, "it is our intention to get your salary to you before the end of the week, possibly in tranches so that everyone gets at least something as soon as possible". One lawyer told RollOnFriday they were sceptical of Metamorph's "intention" to pay "in dribs and drabs".
The accounts of many of the companies in the group are five months overdue and employees told RollOnFriday that Metamorph's inability to pay their wages sat oddly with its claim that an unidentified funder had agreed to step in at Knowles Benning. "We were told we were going to be paid thanks to this amazing new investor in Knowles Benning", said a lawyer: "It doesn't add up". Another said that "people are having to borrow money off other people to pay their mortgage. It's disgraceful".
Metamorph's latest difficulties take place against the background of a restructuring which will shrink its business. In an email to staff sent prior to the appointment of the official receiver, Metamorph confirmed that it would be shedding MLL, BPL and Metamorph Group Services employees as part of the process, telling them that, "Sadly, it is not going to be possible to offer roles to everyone, as going forward we will have a much smaller business with fewer offices", and that it will close in York, Wakefield, Lytham, and Telford.
Before the receiver's appointment threw a spanner in the works, the board described how several of Metamorph's remaining legal brands, including Beeton Edwards, Browns, Knight Polson and Parrott and Coales, will 'hive up' into Knowles Benning on 31 December, while several offices will close.
Questions have been raised by Metamorph staff as to founder Tony Stockdale's future role. Despite giving the impression he would be stepping back from the leadership of the company when he confirmed he was surrendering the CEO post, he was appointed as a director of Knowles Benning in July. And although he was terminated as a director of Metamorph's parent company, Metamorph Group Limited, on 1 November, he was reappointed as a director three weeks later.
Meanwhile, another Metamorph company, Quality Solicitors, has been bought out by its management team, led by Victoria Browning, a former secretary who is now QS's Network & Partnership Operations Director, and Paul Rawson, a non-executive director of QS who also served as Metamorph's marketing director.
The Metamorph board assured staff, somewhat confusingly, that "all Metamorph offices are joining QS as full members" in an email passed to ROF. "Does that mean we are all part of Quality Solicitors? We don't know", said a Metamorph lawyer. ROF put that question and others to Metamorph, but it said it did not have a comment.