A running account of insolvency history – the lawyers and the accountants

In an account of the interaction between lawyers and the newly titled accountants in 19th century England, it has been explained that while accountants were listed among those being able to conduct the administration of estates under the 1831 Bankruptcy Act, lawyers were not included.[1]

The account continues:

“The absence from this list can be understood in terms of the modest rewards associated with insolvency work compared to other types of work that established lawyers undertook.  The legislators’ assumption appeared to be that insolvency work would not particularly attract lawyers.  Linked to that was another assumption that insolvency work, with its emphasis on commercial skills was not particularly relevant to the average lawyer. The lawyers themselves did not protest against either of these assumptions and instead reinforced them by keeping out of insolvency work. This was especially true of solicitors whose established role as estate managers would have put them in a good position to capitalise on insolvency work.  Yet, such an opportunity was rejected.  This can only be understood with reference to the wider processes and conditions facing the legal profession.  That is, the processes that made lawyers elevate social, moral and status concerns over immediate financial advantage when determining the parameters of their rather ambivalent professional role: to act as gentlemen, businessmen or both.  The association of insolvency with debt collecting had unfavourable connotations for solicitors already conscious of their ambivalent moral and social position.

On the other hand,

“it would be fair to say that accountants could not afford to turn down the emerging bankruptcy and insolvency work”.

Would lawyers like to re-think this, or accountants?

More soon.


[1] Insolvency Practitioners and Big Corporate Insolvencies, Flood & Skordaki, Research Report 43, ACCA, 1995. References omitted.

Posted by Michael Murray

Michael is a lawyer and writer on insolvency and reconstruction law and practice, personal insolvency, corporate governance, regulation, government law, and business ethics, among others. He is qualified in law and insolvency, and in criminology and its connected disciplines. Michael is a Fellow of the Australian Academy of Law.