Q&As

Can solicitors serve a statutory demand for unpaid legal fees as a precursor to bankrupting a former client?

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Published on LexisPSL on 14/07/2016

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • Can solicitors serve a statutory demand for unpaid legal fees as a precursor to bankrupting a former client?

Can solicitors serve a statutory demand for unpaid legal fees as a precursor to bankrupting a former client?

STOP PRESS: From 6 April 2017, the Insolvency Rules 1986, SI 1986/1925 were revoked and replaced by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. The content in this Q&A may have been affected by this change.

The answer to this Q&A will depend on other alternative methods by which to recover the sums due (for example, a claim commenced under CPR Part 7).

Section 267(2) of the Insolvency Act 1986 sets out the conditions that need to be met in order for a bankruptcy petition to be presented at court:

  1. the debt must exceed £5,000

  2. the debt must be for a liquidated sum, be unsecured, and due imminently or at some certain future time

  3. the debtor must be insolvent (established by either an unsatisfied statutory demand, or unsatisfied execution of a judgment debt)

  4. there must, at the time of presentation, be no outstanding application to set aside the statutory demand (unless the petition is based upon an unsatisfied execution of a judgment debt

For further reading, see Practice Note: Creditors' bankruptcy petitions—grounds and documents required for presentation.

In respect of solicitors’ fees, it is usually the second point above that comes into focus—whether those fees are for a liquidated sum or not. In Klamer v

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