When ‘Non-Authorised Staff Shouldn’t Lead’ Applies to Insolvency Too … and Why I’m Raising It

by | Mar 5, 2026 | 40 Years in Insolvency - Now Let's Talk Honestly

I’m writing this because I keep seeing the same pattern play out with distressed directors.

They’re scared. They’re running out of road. They finally pick up the phone … and the first ‘proper’ conversation they have is not with the licensed insolvency practitioner. It’s with a Business Development Manager, a salesman with a fancy title.

Sometimes that BDM is helpful and stays in their lane. But too often, they don’t. They steer.  (in fact the other day, I received a call from a director who had, that morning, signed up to liquidate his local company through one of the big boys, but could not get the support he needed on some highly technical issues from the BDM – so he rang me and accessed my insolvency copilot, VAi.  You can just imagine how I felt!) 

And the steer has a habit of pointing in one direction … the paid route that earns the firm fees and helps the BDM hit the fee targets they have been told they have to hit to keep their job.

That’s not a small issue. It’s a structural conflict. And it’s one that regulators should be all over, because it goes right to the heart of ‘best advice’.

To explain why, I’m going to borrow a very current warning from the legal profession.

The Mazur case

In Mazur & Anor v Charles Russell Speechlys LLP the High Court had to decide whether a non-authorised person (for example, a paralegal or other unadmitted staff) could conduct litigation under the supervision of an authorised solicitor. The case arose from a dispute about unpaid legal fees and the debt recovery claim that followed.

The High Court decision was handed down on 16 September 2025 and is reported as [2025] EWHC 2341 (KB).

The court’s conclusion was simple and disruptive:

  • Non-authorised staff may support … but they may not conduct litigation ‘even under supervision’.
  • ‘Supervision does not confer authorisation.’
  • And the Legal Services Act framework makes this a criminal law issue, not a lesser ‘practice management’ issue – the Act makes it a criminal offence to carry out a reserved activity without entitlement.

If you want the case record, here’s the BAILII page:

https://www.bailii.org/ew/cases/EWHC/KB/2025/2341.html

 

Key quotations by others in the legal sphere

Legal Futures captured the practical ‘so what?’ in a way insolvency people should pay attention to. It quotes Michael Blüthner Speight (Howden) describing Sheldon J’s judgment like this:

‘mere employment by an authorised firm does not confer the right to conduct reserved legal activities, and supervision does not cure the absence of individual authorisation.’

Legal Futures also records the ‘line drawing’ that followed … including the warning that firms should consider prohibiting non-authorised staff from being the client’s main contact, and from making substantive decisions or exercising independent judgement.

We also have a senior costs barrister, Ben Williams KC, expressing real doubt that Mazur should be treated as the final word:

‘Solicitors have been permitted to conduct litigation through their clerks for generations.’

That quote matters because it highlights something uncomfortable … whole sectors can normalise a practice for years, even decades, right up until a court forces everyone to admit it was never properly tested.

And then you get the messy courtroom reality. Barrister David Bowden reported a judge throwing out a late Mazur argument as:

‘naked opportunism’

So yes … the legal profession is now trying to work out where ‘support’ ends and ‘doing the reserved thing’ begins. The SRA’s own summary puts it bluntly:

‘people who are not themselves authorised … can only support authorised individuals … rather than conducting litigation themselves under the supervision of an authorised individual.’

Why am I talking about this as an insolvency practitioner?

Because insolvency has its own version of the same risk.

Not ‘conducting litigation’, obviously … but giving option-shaping advice to a vulnerable director at the exact moment they’re deciding what route to take.

In too many firms, the person doing the early steering isn’t the IP. It’s the BDM. And the BDM’s incentives are often obvious:

  • convert enquiries into paid appointments
  • meet monthly targets
  • keep the pipeline flowing

That’s not a criticism of individuals. It’s a criticism of the model.

If the first meaningful conversation is with someone who has a commercial objective, you’ve created the conditions for biased advice. Even if the IP later ‘reviews’ it, the director is often already committed … emotionally, procedurally, and sometimes financially.

That’s the insolvency equivalent of ‘supervision does not cure it’.

The DS01 angle: cheaper lawful routes get sidelined

This is exactly why I wrote about the DS01 strike-off route and how it’s sometimes dismissed too quickly, or presented as ‘not allowed’ in situations where it may be lawful and proportionate.

Here’s that blog:

And here’s the broader point … we still don’t have a proper low-cost corporate wind-down equivalent to a DRO for individuals. I have also covered this off in another blog:

When the system lacks a simple, affordable route for micro-companies, directors become easy prey for ‘solutions’ that just happen to come with a price tag.

The ethical point, stated plainly

It cannot be ‘best advice’ to push a director into an expensive paid route if a cheaper route fits better, unless you’ve actually tested the facts properly, including:

  • creditor pressure and petition risk
  • whether the company has assets, funding, and real complexity
  • director conduct risks
  • whether a rescue option exists
  • whether a lawful strike-off route is viable in the circumstances

That needs professional judgement. And crucially, it needs independence from sales targets.

So why aren’t regulators investigating this properly?

Here’s my challenge.

Regulators can, and do, carry out detailed compliance work after appointment. They’ll check SIP compliance with almost micro precision. They’ll dissect the file … the wording of reports, the record of leter decisions, the time ledger, the charge-out narrative, the order of payments. All important, by the way.

But in too many cases, the die has already been cast.

The director was ‘steered’ before appointment. The route was chosen before the IP ever had a proper conversation. Money was committed. Expectations were set. Sometimes the director’s personal finances were already on the line.

So we end up regulating the paperwork that follows the decision … instead of scrutinising the moment the decision was shaped.

If regulators wanted to investigate that moment, they could ask for:

  • call recordings and enquiry notes
  • scripts and training materials
  • commission and KPI structures
  • evidence of IP involvement before a route was recommended
  • evidence that lower-cost alternatives were properly explained (and why they were ruled out)

That’s not a witch hunt. It’s basic consumer protection.

And if the profession doesn’t get ahead of this, it will end up with its own Mazur moment … where something long tolerated suddenly gets tested, publicly, and painfully.

My bottom line

BDMs have a role. Marketing has a role. Intake teams have a role.

But option-shaping advice … the kind that pushes someone toward a specific route with a specific cost … must sit with the licensed professional who is accountable for it.

Otherwise, the director isn’t getting advice. They’re being processed.

And in a profession that’s supposed to be about fairness, outcomes, and public trust … that should worry all of us.

Reference links

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