Law: Tailor-made to suit debtors: Individual voluntary arrangements can help lawyers who get into serious financial difficulty, reports Neasa MacErlean

THE RECESSION has introduced the legal profession to financial hardship on a scale never experienced before. Hundreds of solicitors have lost their jobs. Many firms have had to make staff redundant or cut back on other overheads to ensure their own commercial survival.

But for some lawyers these measures have not been enough. A small and growing minority has come face to face with financial calamity. The obviously fraudulent, the no-hopers and those who 'borrow' from their clients' accounts are forced into bankruptcy and thereby barred from providing legal services. For some people - like Harold Weston, the Lloyd's Name solicitor who killed himself recently at the prospect of bankruptcy - this is an overwhelmingly horrendous prospect. Some solicitors, however, manage to cling on to their practising certificates by agreeing to an individual voluntary arrangement (IVA) - a tailor-made programme of partial repayments spread over three to five years.

The Solicitors Complaints' Bureau (SCB) does not keep a tally but says that the numbers of solicitors informing it of serious financial difficulty have increased noticeably over the past year. The Bankruptcy Association gets two or three calls a week from distressed solicitors, many of them falling over the edge because of the decline in conveyancing work.

David Temporal, a management consultant with Hodgart Temporal, says that the number of bankrupted solicitors is likely to continue to rise in the tail end and the aftermath of the recession. Creditors have more to gain from bankrupting a debtor when asset prices have begun to rise, he says, and solicitors are not generally known for their financial acumen. Mr Temporal says: 'We hear of some firms where the partners have enjoyed very high drawings, but then their income has suddenly fallen away.'

The crucial issue is whether a solicitor can keep on in practice by arranging an IVA rather than losing everything - professional qualification included - during a period of bankruptcy. To qualify for an IVA, a solicitor must win the approval of at least 75 per cent (by value) of his or her creditors. They will usually have to be persuaded that they will get back more of their debts through the IVA than by filing a bankruptcy petition. The solicitor will pay, typically, between pounds 1,000 and pounds 5,000 to a licensed insolvency practitioner to administer his IVA and to agree terms with the creditors.

For total debts of less than pounds 20,000 a solicitor can normally avoid both bankruptcy and the IVA process. But IVAs are still feasible on debts as large as pounds 500,000 or more. The solicitor agrees to make regular payments to his creditors for the length of the IVA. If he keeps up the payments he is in the clear and in the same position as someone who has never suffered financial problems.

Trevor Sears, a solicitor at Booth & Blackwell, is currently advising half a dozen fellow lawyers on their IVAs. 'A lot of them are very worried: they've got these money problems and they've also got the practice to run,' he says. 'But then they see a light at the end of the tunnel and they know that one day they'll be free of these debts. Actually, it's a tremendous weight off their shoulders.'

Many solicitors, Mr Sears says, have been coping with a growing financial anxiety for years. They have put off dealing with the problem until they can no longer ignore it. Many of them act only when they are faced with a bankruptcy petition. But, even at this stage, creditors can often be persuaded to accept an IVA.

The biggest hurdle is usually getting the agreement of the SCB. If there is any hint of impropriety - particularly any threat to clients' funds - the bureau will veto an IVA. Consequently, the fact that a solicitor is undergoing an IVA suggests that he has an honest record. The SCB has produced an insolvency fact sheet to send to practitioners who are worried about their position.

Shirley Jackson, an insolvency practitioner with the accountants Begbie Norton, has handled several solicitors' IVAs. She believes that the psychological effects can be more difficult to deal with than the financial consequences of bankruptcy or contemplating an IVA. 'It's usually men ; they can feel emasculated by losing the business,' Ms Jackson says.

Many of the solicitors currently in straitened circumstances have no previous experience of financial suffering. They may even have been quite good at managing their money, and the cause of their current problems could be one over-ambitious decision in the past.

Indeed, Booth & Blackwell says the typical picture of a solicitor's IVA is someone whose work has fallen off and who is paying pounds 50,000 too much a year in rent because of a lease agreement negotiated five years ago.

After agreeing to an IVA, the SCB often insists on regular progress reports. It also generally requires sole practitioners to go into partnership with others. Finding a partner in these circumstances can be more difficult than complying with the other terms of the IVA. But some potential partners will accept that a solicitor's legal skill is separate from his ability to manage his own money.

In some quarters, however, IVAs have a poor reputation. The system was established only in 1987, and only a few people have completed the process. John McQueen, the chief executive of the Bankruptcy Association, has serious concerns. 'We were very keen on IVAs at first but now I'm very much opposed,' he says. 'Creditors have made too many demands on debtors, large numbers of IVAs have collapsed and the debtors have gone bankrupt. That's the worst possible outcome.'