McDermott Smith Law - Case Update

Andrew Hosking and Sean Bucknall of Quantuma and Damian Webb of RSM, the joint administrators of Liverpool-based law McDermott Smith Law, have filed their proposals for the firm, but the precise circumstances leading to its collapse are still largely a mystery.

McDermott Smith was established in February 2016, growing to 69 employees in 2023. It specialised in volume consumer claims, providing legal advice on a no-win, no-fee basis and handling claims pertaining to personal injury, housing repair, motor finance, debt and Japanese knotweed.

In June 2024, secured creditor Fenchurch Legal sought advice from Quantuma on the options available to it and a joint appointment was considered appropriate. The joint administrators were appointed on 1 July. Given that the joint administrators were appointed by a secured creditor, there is little information regarding wider events leading up to the administration.

What is known is that in late June, shortly before the administration, the Solicitors Regulation Authority attended at McDermott Smith’s trading premises and noted that the site had been vacated and completely cleared of all office equipment and furniture. It was later discovered that a significant number of client files and staff had transferred to another legal practice, BPS Solicitors, as well as to Langton Law (whose sole director was also a director of the firm) and Net Solicitors. As a result of this visit, the SRA intervened into McDermott Smith on 3 July. BPS was also later shut down by the SRA to protect the public.

Secured creditors Katch Fund Solutions and Fenchurch Legal (both litigation funders) are owed approximately £7m and £900,000, respectively. The joint administrators anticipate that there will be sufficient funds to pay a distribution to preferential and/or secondary preferential creditors only, noting that any remaining staff were made redundant on their appointment and that there have been no asset realisations to date.

The joint administrators’ proposals can be found HERE.