An order of Parliament gives Newcastle Regulation the power to seek a court order for intervention. This court order gives us the power to close down an entity.
We will only carry out an intervention into an entity where we feel it is necessary to do so in the interest of the public, for example to protect clients’ interests or client money.
The powers for intervention are set out in articles 3 and 4 of the Legal Services Act 2007 (Chartered Institute of Legal Executives) (Modification of Functions) Order 2014.
What is the effect on your firm?
The effects of an intervention are:
- that your authorisation as an authorised entity will be revoked, meaning that you will no longer be able to provide legal services
- the money held by your firm will vest in us
- we will take possession of your entity’s documents, including client papers
What is the intervention process?
We will appoint an intervention agent to carry out the intervention work on our behalf. The agent will not take over the management and running of client matters nor will they take over your firm. Their aim is to manage the closure of your firm.
The agent will meet you, at your firm address, on the day of the intervention. They will be accompanied by one of our officers who will explain that:
- all files, papers, records and monies of your firm vest in us except for purely administrative papers, e.g. PAYE records, VAT returns; and
- you have a right to contest the intervention
The intervention agent will:
- identify any urgent client matters requiring immediate attention
- access the accounts system
- investigate any monies held by the firm
- establish what are client papers
- need access to deeds/will stores
- identify where archived files are stored
The agent will remove all papers, schedule them, and distribute them in accordance with client instructions.
Your assistance (or that of your staff) with this process will help your clients and make these actions simpler for all.
Contesting an intervention
If we have obtained an intervention Court Order, you have a right to apply to the High Court for the intervention to be withdrawn. You may wish to seek legal advice on making such an application.
You can do this by applying to the High Court within eight days of service of our intervention notice on you. You must give us, and the intervention agent, notice in writing of your application.
The application itself will not stay the intervention.
What happens to client monies after an intervention?
Following an intervention, we will hold (on statutory trust) any monies held by your firm. The intervention agent will try to identify anyone with a beneficial entitlement to the money and distribute it to them.
If your clients are unable to wait for the distribution of money held on trust they may claim on the Newcastle Compensation Arrangements. If a grant is made to a client out of the Newcastle Compensation Arrangements, the fund may then be entitled to the money held in the statutory trust account for that client up to the amount paid out by the fund. In this case, the money from the trust account is offset against the amount owed by you.
The Newcastle Compensation Arrangements will also be entitled to make a claim against your firm for any money it cannot recover out of the money held on statutory trust.
If your firm is intervened into you will be personally liable for the costs of the intervention and such costs will be recoverable from you as a debt.
The intervention agent will send us invoices as they incur costs for the intervention work. We will approve each invoice before paying it and send a copy to you to seek re-imbursement.
When you receive the first invoice, we will ask you for your proposals to settle the debt. The debt continues to increase as we receive and pay invoices from the intervention agent. We will keep you informed of all costs incurred.
We can pass a resolution to vest in us any rights you have to pursue debts owed to your entity or raise bills. In other cases, you can raise bills and pursue outstanding costs due to your practice. Any money you recover vests in us and offsets your debt to us.
If we do not receive satisfactory proposals from you, we will take enforcement action to recover the costs.