There exists something of a disconnect between how busy costs practitioners tend to tell you they are and what the market would suggest.
Certainly, most costs lawyers and costs draftsmen would have you believe they are very busy and business is booming. Sadly, the visible evidence suggests everything is not quite so rosy.
Just Costs has just gone into administration (effectively for the second time). This is reported to have led to 26 redundancies. But to put this into context:
- Back in December 2016, it was explained that Just Costs had “consolidated” from four to two offices and reduced its headcount from 110 to 70.
- In October 2017, when they emerged from their previous administration, via a CVA, it was announced that this would save 46 jobs.
- A few weeks ago it was reported they had 33 staff.
Legal Futures reported Nick McDonnell, a director at costs firm Kain Knight – and a director of the original Just Costs for two years to April 2017 – as commenting:
“The changes to the legal costs industry continue to hit some costs firms very hard. The issue isn’t so much attracting work but, particularly in the personal injury sector, there is an expectation to offer deferred payment terms. This can mean deferring payment on costs management and budgeting work, for example, for up to 12 months. This significantly affects a firm’s cash flow and the administration of Just Costs Solicitors is the latest example of this.”
Long established costs drafting firm Neat Legal Services went into administration in 2018.
Cost Advocates was another casualty, ceasing to exist in 2017.
There have been numerous other job losses, redundancies, department closures, office closures and (probably) forced mergers over the last few years.
One of the online comments posted below the Law Society Gazette news report on this stated:
“What you are basically seeing is the larger, badly run firms falling by the way side. Big is not beautiful any more and Just Costs was always a bad business model anyway. They will not be the last multi-office firm to go under this year. I am in the game and I hear rumours all of the time about other firms. This all started as a cottage industry 30/40 years ago and that is where it will end up – i.e., bespoke one man band experts rather than big firms with high overheads that they cannot sustain in this declining market.”
4 thoughts on “Just Costs gone (again)”
Any takers on which big firm is next?
Amusingly, Paul Fulcher has taken the quoted comment above (which I posted on the LSG website), has changed a couple of words and has then posted it on his LinkedIn page as if he wrote it.
All very sad but predictable. As Simon states, the business model of deferring payments for Budgets for the life span of a Multi-Track case is flawed. You still have to pay wages to the staff who prepare the Budgets and cover the usual apportioned overhead costs. That is for at least a year if not much longer. There is no guarantee of getting paid either at the end. Most are acting on No Win No Fee arrangements. Costs Firms are deferring payments to try and tie Solicitor firms to the bill drafting at the end! Bad business model. The only way is DOWN am afraid for those firms expecting a bumper pay day!!
This firm had a lot of talented staff at one point, unfortunately the management side of things was perhaps not as good as they thought.
If you ask me too many ego’s and greedy traits.
“The issue isn’t attracting work”? what a load of hot air that is but doesn’t really surprise me. So nothing to do with failures to put in to place forward planning from 2013 when all of the consultation papers were in the public domain?
Cash flow has always been poor in the costs world, this is nothing new, the problem here was that the “big time Charlie” approach against the backdrop of dropping low value high volume injury claims exposed those simply were not innovative enough to keep their niche clients.
If you clients were demanding deferred payment, you clearly had no choice to say yes because you were already in big trouble.