Another fast-growing claims firm in the north west has run into financial difficulties, with administrators appointed to handle the business.
A notice in the London Gazette today reveals that administrators from Quantuma were sent in to deal with the affairs of McDermott Smith on Monday.
A separate court document filed on Monday showed the company’s intention to appoint administrators following an application from litigation funder Fenchurch Legal.
It is understood that contact has been made with McDermott Smith by the Solicitors Regulation Authority this week about how the firm is being managed, although the regulator has not been able to confirm that.
McDermott Smith, based in Bootle, operates on a no win, no fee basis handling claims for personal injury, housing disrepair, motor finance, debt and Japanese knotweed.
The business was incorporated in 2016 and initially operated on a very small scale: accounts for 2018 show McDermott Smith Law Ltd had assets worth £359,000 and owed a similar amount. Solicitor Andrew Smith, admitted to the roll in 2008, was the sole director at incorporation and continues to own 100% of the business.
The most recent annual accounts, filed in December and covering the year ended 31 March 2023, show the business grew remarkably quickly over 12 months.
Work in progress was judged to be worth £37m, up from £5.6m a year before. Meanwhile, the amount owed within a year jumped from £5.8m to £37.5m. It is understood much of this debt is due to agreements with litigation funders.
The average number of people employed by McDermott Smith grew from 24 to 69 in a year.
The Gazette has attempted to contact Smith and the firm. He has not responded to a request for comment and the firm’s phone is not being answered.
McDermott Smith is the latest claims firm in the north to have encountered financial issues after growing exponentially. Pure Legal and SSB Group have both gone into administration in the past three years after becoming unable to convert thousands of cases into a profitable business. Both firms are subject to an investigation by the SRA, although there is no suggestion that McDermott Smith is being investigated.
