Asset in recovery

With insolvency issues unfortunately much in the air, the field has re-emerged as one where opportunities currently exist for legal work. But how easy or otherwise is it to take it up?

Those who have done so agree that if you want to achieve recognition, there is a great deal to learn, not least because insolvencies cut across many other legal relationships, so that insolvency lawyers have to deal with a very wide range of work.

That is part of its appeal to solicitors such as Gillian Carty of Shepherd & Wedderburn. “Personally I enjoy the variety”, she comments. “Insolvency doesn’t happen in a vacuum, so there is a huge variety in the legal issues that you need to be familiar with and able to deal with in an insolvency context, from corporate and property issues through to employment and contractual issues.”

Like many practice areas, the subject has become far more specialised in the last couple of decades, particularly since the regime set up under the Insolvency Act 1986 for qualification as an insolvency practitioner (IP).

Top training

Practitioners like Roy Roxburgh of Maclay Murray & Spens’ Aberdeen office, who could demonstrate the necessary experience, were “grandfathered” into the new regime through recognition by their professional body – here, the Law Society of Scotland or Institute of Chartered Accountants in Scotland. Those who have entered practice more recently have had to go through a process that now consists of the exams set by the Joint Insolvency Examination Board (JIEB).

It is not of course necessary to achieve recognition as an IP to work in the field, nor do lawyer IPs normally find themselves taking on the full range of IP work. But as the current moderator for the JIEB exams, Roxburgh is keen to see more solicitors come forward. “The qualification gives you a better understanding of the system and makes it easier to attract instructions from accountants to do the associated legal work”, he maintains.

While recognition has to be renewed every three years, work on such instructions carried out during your current term is sufficient experience, even if it could also be taken on without the IP badge.

Roxburgh’s main aim is to encourage more solicitors to tackle the JIEB exams, but he also wants to see an increase in the 20-odd insolvency specialists accredited by the Law Society of Scotland. One such is Rachel Grant of Brodies, who serves on the Joint Insolvency Committee, regulator of IPs in the UK. Covering both personal and corporate insolvency work, her clients include banks, government departments, IPs, company directors – “anyone touched by insolvency”.

Grant, while maintaining that her 20 years’ experience makes it less necessary to pursue the full IP qualification, recommends it to younger lawyers now coming through: “If you’re serious about insolvency practice, it’s a way to get in-depth knowledge. The JIEB course is a mixture of accounting and law. For lawyers it’s not so much a way to qualify as an IP as the means of in-depth study – basically the equivalent to doing a masters in, say construction law, as there isn’t such a thing in insolvency.”

The annual exam covers the three key areas of bankruptcy, liquidation and creditors’ voluntary administration, including receivership and administration. You have to pass all three, but don’t have to take them all at once.

Encouragement

Although more have taken the course as a means of study, only a handful of solicitors have actually passed the exams. Gillian Carty is one. “I signed up solely with the intention of learning, and very quickly found that almost everyone else was gearing up to become licensed insolvency practitioners and sit the exams. Even though no other solicitor had successfully taken the exam at that time, I was given a lot of positive encouragement from the tutors and decided to give it a go – I had nothing to lose! Well, I say nothing to lose if you ignore the weekends studying and the hammering that the social life took for a few months, but it was all worth it when I passed and became fully qualified.”

She adds that while the exam may include preparing financial statements, help is available to become familiar with these. “There is balance in the syllabus between the legal, practical and financial aspects of the job, so if you have a broad experience before you sit the exam, that will stand you in good stead.”

Roxburgh would like to have more training available at all levels, to encourage those considering a move, and also to support general practitioners receiving more inquiries from individuals facing insolvency. “It’s essential that we have people who at least become insolvency specialists.” Once in the field, there are associations, publications and local practitioner forums to help build knowledge and contacts.

The message that it’s a practice area with a lot to it is echoed by Rachel Grant. “I’ve always found it varied and fascinating work – but it’s not something to be taken up lightly.”