"We've got reports of a morph, and it's a bad one."
The SRA has intervened in four Metamorph firms, resulting in the closure of over a dozen of the troubled legal network’s brands.
The interventions in MLL Limited, BPL Limited, Beaumont ABS Ltd and Attray Ltd means all of Terry Jones Solicitors, Linder Myers Solicitors, Donnelley & Elliot Solicitors, SLC Solicitors, Verisona Law, Beaumont Solicitors, RJW Legal and their associated conveyancing brands have been shut with immediate effect.
Metamorph owns five other firms which are not subject to an intervention: Parrot & Coales, Knight Polson, Browns Solicitors, Beeston Edwards, and Knowles Benning, to which many of the assets were being transferred.
A Metamorph employer told RollOnFriday, “it was horrific to experience as a member of staff, however they were extremely helpful, understanding and direct. It was the first time in a long time that I felt supported. They took all of the post completion cases and any cases where we hadn’t received direct consent to the transfer to Knowles Benning. Honestly it was a huge weight off our shoulders as we knew things needed doing on them, but hadn’t been able to due to the consent issue”.
RollOnFriday predicted last week that the regulator was about to step in, as staff described chaotic scenes including delayed transactions, inaccessible office accounts, no HR or IT support, locked offices, sobbing case handlers, and furious clients. Emails showed lawyers begging management to make them redundant.
When ROF approached the SRA at the start of December to convey Metamorph employees’ incredulity that it had not yet intervened, a 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".
After taking action this week, the SRA said in a statement that the interventions were "necessary to protect the interest of clients and former clients of those firms".
The interventions mean the SRA has taken possession of all documents and money held by the closed firms, and an SRA-appointed agent will "deal with all matters currently held by these firms".
The SRA said it "will now investigate further the issues raised that have led to this intervention to see if any additional action is necessary. At this stage of the SRA's work, no further details can be disclosed".
Don’t worry, ROF has other means. A Metamorph insider told us on Thursday, “We thought the hardest part was over, however today we were disconnected from our systems. Around 30 minutes later we received confirmation that our system/network provider hadn’t been paid and had in fact disconnected us. The SRA were notified immediately and it is suspected they will intervene against the remaining brands immediately”.
The first sign all was not well at Metamorph came in September when employees told ROF they were not getting paid on time. Before long creditors were circulating, including HMRC, which presented its winding up petition against MLL Limited on 4 November.
To the surprise of an insolvency expert who spoke to ROF, Metamorph, led by outgoing CEO and founder Tony Stockdale, began to move client files from MLL to Knowles Benning, in anticipation of the court allowing it to appoint its own administrator.
But instead the judge ordered the compulsory liquidation of MLL on 30 November, dooming the latest plan by Metamorph management to take control of the catastrophe. In an all-staff email sent last Friday, employees were informed that as a result of the compulsory liquidation, "HSBC froze out client accounts" and at the same time the banks "also chose to freeze the client accounts of BPL Solicitors and Beaumont ABS Limited", both of which had already been placed into a Creditors Voluntary Liquidation.
Staff were told this was why they had still not been paid, due to some "technical issues". But fear not, said management, because "once the client accounts are released to Knowles Benning then after accumulated client to office transfers are completed (please everyone ensure your billing is completely up to date) salaries will be paid by KB". They were told there was "also over £150,000 in the MLL office account, the first priority of which, after liquidators fees, is outstanding amounts for pensions and salaries".
Unfortunately for the Metamorph Board, all of those client accounts and monies have now been seized by the SRA as part of its intervention, so it’s back to square one. It was the latest confident prediction from bosses to wither within hours. Although their announcement to staff that the company's offices in Sale, Chester and Shrewsbury will close probably is accurate.
Metamorph did not respond to a request for comment.
UPDATE: On 19 December, the SRA also intervened in Knowles Benning and Knight Polson, resulting in the immediate closure of those firms.