Last year SBA The Solicitors’ Charity asked specialist advisers at Citizens Advice Manchester (CAM) to provide its beneficiaries with confidential, bespoke advice on welfare benefits and debt management. CAM’s William Tonks reflects on his experience in advising solicitors on managing their personal debt and offers some useful tips.
The subject of rising personal debt is seldom out of the headlines these days. Are there any particular issues you’ve noticed in dealing with the solicitors referred by SBA for confidential advice?
The main and overriding issue for solicitors is the Solicitors Regulation Authority (SRA) fitness for practice when dealing with indebtedness.
The SRA guidance is explicit that any evidence that a solicitor is unable to manage their finances will call into question their fitness for practice. There is also the presumption of a lack of fitness when faced with county court action or insolvency procedures, unless exceptional circumstances or evidence of otherwise sound financial conduct can be found.
The SRA guidance is pivotal to the limited options available to solicitors who may encounter financial difficulties. This is especially apparent for those who run their own practice. The pressures of running the practice, paying employees and often having little resource left to manage their own finances can create a vicious circle where incurring indebtedness could call into question an individual’s fitness for practice.
Overall, indebtedness in modern society is endemic for most. The solicitors that I deal with are not immune to the same financial pressures that the general population face. Over recent years issues such as LASPO and a more diverse and competitive market have no doubt added to the financial pressure faced by solicitors.
By and large, professional people in the legal profession are well remunerated. Are there any common trigger points for solicitors’ debt difficulties?
The main trigger points I recognise for solicitor indebtedness are ill health – mainly stress related, drop in business activity, loss of employment and relationship breakdown.
Despite many in the legal profession being well remunerated. It is not uncommon for some solicitors not to receive the income many would expect. This can be acute for those running their own practice.
Many colleagues have substantial credit card debts when they apply to SBA. Is this common amongst the various professional clients you advise? What would you recommend in how best to manage these liabilities alongside ‘priority’ debts?
I find that credit card indebtedness is the same regardless of the professions and public alike that I deal with. The ratio of debt to income received remains fairly consistent across the population.
Therefore, for many clients the indebtedness accrued is manageable within their means when work or personal life remains stable.
As for all of us, the way to manage credit liabilities is working out if you can actually afford the debt and prepare for the unknown. The main focus would be to always keep priority debt commitments up to date, but if you’re using credit to pay priorities such a mortgage payments or top-up essential everyday expenditure then this is a strong sign that you need to take stock and seek advice.
I am, however, mindful that none of us live in an ideal world. There are extenuating pressures that arise from various sources, in professional or private life, that can lead to taking on credit we may not be able to manage in the long term. Nobody knows what the future holds, but a solicitor must be more risk averse when thinking about taking out credit due to fitness for practice capability.
The Christmas marketing is now in full swing. In your experience, how much do people put Christmas on credit? Are there any sensible measures people can take to head off potential issues?
I find at the time leading up to the Christmas festivities is a prime example of extenuating circumstances with the associated social pressure to spend. Christmas does seem to be the time of year where personal credit is increased sharply. Once again, the same rule applies that we should try to maintain financial capability to limit or avoid future financial problems. In reality, however, this can be impossible. To try and mitigate against any future problems an ability to save prior to events would be worthwhile if at all possible.
What are you top five tips for effective debt management?
Further advice & support
If you would like specialist advice from CAM on managing personal debt, please contact us on 020 8675 6440 or email email@example.com. Any details you share with SBA & CAM will be treated in strict confidence.
The strain on solicitors coping with financial crises can be overwhelming. You can lean into the free, confidential Helpline service provided by LawCare, who offer emotional support and advice to the legal professions. Call on 0800 279 6888 Mon-Fri 9am – 7.30pm, weekends & bank holidays 10am – 4pm.
The Solicitors Assistance Scheme also offers an invaluable resource for colleagues in managing a whole host of professional issues, including practice management, fraud, insolvency and disciplinary matters. Visit https://www.thesas.org.uk/members/ to see the expertise and contact details of participating members.