Truro-headquartered Follett Stock has been served with a winding-up petition by HM Revenue & Customs (HMRC) after failing to pay an outstanding tax bill, The Lawyer has learned.
The notice was served on the firm in August and Follett Stock has until Monday (30 September) to settle the bill or it will be forced to go to court.
Sources close to the firm suggested that it had not paid an outstanding VAT or income tax bill, though the debt could relate to both as HMRC now deal with both VAT and income tax issues.
HMRC is believed to have issued a statutory demand against the firm several months ago, the last port of call for creditors demanding unpaid debts.
Managing partner Chris Lingard could not be reached for comment on the HMRC proceedings.
In anticipation of the Monday hearing, the Cornwall Law Society has put together an action plan to help clients should the firm face severe financial difficulties.
Cornwall Law Society president Jeremy Harvey said: ”The failure of any business is very sad, whatever the reason, as it has such serious repercussions for clients and staff. There have been rumours about the stability of Follett Stock both in relation to finances and other issues, so this comes as no surprise.”
The Society put together a plan to help clients of firms affected by financial difficulties after the SRA revealed that 160 firms were in financial trouble (14 June 2013).
“The Cornwall Law Society committee concluded at its meeting last week that we should have a contingency plan in place in the event that a law firm failed in the County,” said Harvey. ”That plan has now been written and will be effective once any announcement about the future of the firm is official.”
He added: ”It has been clear that law firms have been under financial pressure for some time, for a whole variety of reasons. With that in mind the Society has put a number of initiatives in place to enable it to deal with those pressures – educating junior members on the financial management of law firms, a forthcoming training course focusing on specific, relevant financial issues and the creation of a special interest group for those that have the oversight of regulation in their firms.”
Last month Follett Stock settled claims of sexual harrassment against managing partner Chris Lingard (27 August 2013). Solicitor Kate Baker had accused Lingard of bullying her while she worked at the firm, she claimed she was sacked after she started a relationship. Baker filed claims of sexual harassment, sexual discrimination and unfair dismissal against the firm. The matter was settled before progressing to a full tribunal.