Creditors face heavy losses as administrators recover just £491k from the failed Pure Legal claims book
Administrators managing the collapse of north west claims firm Pure Legal have recovered less than 2% of the company’s estimated £30m work in progress, according to a newly published progress report.
Insolvency specialists were initially optimistic that the ongoing caseload could generate over £30m after the firm entered administration in November 2021. Pure Legal’s own directors had placed the value of its work at approximately £45.5m at the time.
However, the latest update reveals a bleak outcome for creditors. Most of Pure Legal’s outstanding cases have either been closed or discontinued, with only £491,000 recouped from work in progress. Of that amount, £84,000 came from transferring case files through a third party to panel firms, while another £44,500 was recovered from ongoing GDPR data breach claims.
Embed from Getty ImagesThis failure to monetise the company’s significant claims book deals a heavy blow to those owed money. Lenders, who collectively face losses of almost £11m, are unlikely to see any return from the administration. HM Revenue & Customs, which is owed £524,000, is also expected to receive nothing.
Unsecured creditors are left in an even worse position. With claims totalling nearly £41m, they too face receiving no repayment, aside from a small sum from the prescribed part of funds set aside under insolvency rules.
The administrators, from insolvency firm Kroll, reported that extensive investigations into Pure Legal’s affairs continue. They have issued letters before action to several third parties regarding events leading up to the firm’s administration, though details of these claims remain undisclosed.
Since the administration began, Kroll’s team has logged 8,861 hours on the case, billing £3.6m in time costs at an average hourly rate of £407. Total expenses have now surpassed £5.4m, the majority of which has already been paid.
Pure Legal had been a major player in mass claims litigation, specialising in areas such as housing disrepair and cavity wall insulation claims. The firm’s business model, based on amassing thousands of similar claims, ultimately proved unsustainable—a fate shared by several other firms using the same high-volume approach over the past four years.
The recent Civil Justice Council (CJC) report on litigation costs specifically cited Pure Legal’s collapse, alongside that of SSB Law, as examples of serious consumer risk. According to the CJC, clients were often left heavily indebted due to adverse costs orders and the failure of after-the-event (ATE) insurance policies to cover those liabilities.
The report warned that these cases could point to a wider systemic issue in the legal sector. “Law firms have, through securing portfolio funding, developed high-risk and unstable business models that depend on unrealistically high levels of return,” it stated.
The CJC’s concerns highlight the fragility of a funding model that appeared lucrative on paper but crumbled under financial and regulatory pressures. Portfolio funding allowed firms like Pure Legal to scale rapidly, but with insufficient safeguards, both clients and creditors now face the devastating fallout.
Pure Legal’s collapse has left behind a cautionary tale for the legal industry, regulators, and funders. While administrators continue their investigations, the prospect of any meaningful recovery for creditors grows increasingly remote.
