Effect of adjudication in bankruptcy
Under section 50 of the Solicitors Act 1954, adjudication in bankruptcy of a solicitor operates immediately to suspend his or her practising certificate (if any) until:
a) The practising certificate expires, or
b)The adjudication in bankruptcy is annulled and an office copy of the order annulling the adjudication is served on the Registrar of Solicitors, or
c) The suspension is terminated under section 51 of the Solicitors Act 1954, whichever first occurs.
Under section 51 of the Solicitors Act 1954, as now in force, where a practising certificate is suspended by virtue of section 50, the solicitor may, at any time before the certificate expires and the adjudication in bankruptcy is annulled, apply to the Law Society to terminate the suspension, and the Law Society may terminate the suspension unconditionally or subject to such terms and conditions as the Law Society thinks fit, or refuse the application.
Where the Law Society, on such an application, refuses the application or terminates the suspension subject to any terms or conditions, the solicitor may appeal to the President of the High Court and the president may:
- Terminate the suspension unconditionally or subject to such terms and conditions as he thinks fit,
- Vary any terms or conditions to which the termination of the suspension has been made subject, or
- Refuse the appeal.
The power to deal with applications under section 51 has been delegated to the Regulation of Practice Committee of the Law Society. The committee will deal with any such applications taking account of the facts applicable to each individual case.
Solicitors who are faced with the prospect of bankruptcy should prepare a wind-down plan and contact the Law Society regarding their cessation obligations, which include, but are not limited to:
- Divesting of client files,
- Submitting a closing reporting accountant’s report,
- Dealing with requirements relating to run-off cover from the run-off fund, and
- Providing an address for the purpose of future correspondence.
Useful guidance in relation to cessation obligations and run-off cover can be found in the ‘closing a practice’ section in the members’ area of the Law Society’s website.
The provisions of the Solicitors Acts 1954 to 2008 (Professional Indemnity Insurance) Regulations 2011 (SI no 409 of 2011) pertaining to run-off cover apply to a firm that has ceased to carry on practice as a result of its principal or all its partners becoming bankrupt in the same way as to any other firm that has ceased to carry on practice.
One of the consequences of adjudication in bankruptcy is that the solicitor’s client bank accounts will be subject of a freezing order. Client account cheques issued prior to adjudication that have not been presented for payment will not be honoured. Any solicitor about to be adjudicated in bankruptcy should desist from issuing client account cheques in the period immediately prior to adjudication. Where cheques have issued prior to adjudication and have not been presented for payment, the solicitor should notify the parties concerned that the cheques will not be honoured when presented for payment. Such payments should be brought to the immediate attention of the official assignee
By reason that a third party, probably another solicitor, will be dealing with the clients’ affairs, the solicitor must ensure that the books of account of the practice, in particular the client and office ledgers, are completely up to date and that recent transactions are recorded in these ledgers.
If you require further information with regard to the consequences of bankruptcy for a solicitor, for either yourself or on behalf of a colleague, please contact Sorcha Hayes, practice regulation manager, at s.hayes@lawsociety.ie. The Society can deal with such queries on a confidential, no-name basis if requested.
John Elliot,
Registrar of Solicitors and Director of Regulation