Thousands of legal claims are now in limbo
A firm of solicitors which worked for a leading claims management company has been shut down by the Solicitors' Regulation Authority (SRA).
The SRA has closed the Manchester office of Consumer Credit Litigation Solicitors (CCLS) which advised the claims firm Cartel Client Review.
The SRA said it had acted to protect clients of CCLS because of "suspected dishonesty".
Cartel is the subject of a separate Ministry of Justice investigation.
The SRA said it was concerned that CCLS had not been acting in the best interests of clients whose business had been channelled to it by Cartel.
"We have evidence and we have been looking at CCLS for weeks," said a spokesman for the SRA.
He explained that until mid-February the legal firm had had about 100 staff but most had walked out after being left unpaid.
The CCLS offices were shut on Wednesday morning and another firm, Gordons of Bradford, has been appointed to take over the files.
"The intervention protects the immediate position and safeguards documents and clients' money held by this firm," the SRA said.
The regulator said the law firm had "tens of thousands" of customers files, "which just seem to have been put in boxes".
A former employee of CCLS, a trainee solicitor, told the BBC that no-one at the firm had been paid for the past two months.
"We were due to be paid yesterday but that didn't happen," he said.
"The SRA came in on 10 February and stayed for a week - they have been in once or twice a week since then," he added.
The SRA said customers of CCLS would receive letters asking them what they wanted to do with their files.
Customers are advised either to get in contact with Cartel, to see if the firm can arrange alternative legal advice, or to find another solicitor themselves to pursue their case.
CCLS worked almost exclusively for Cartel Client Review.
The claims firm specialises in trying to challenge the enforceability of debts, such as credit cards and personal loans, as well as claiming for the refund of mis-sold financial policies such as payment protection insurance.
Customers are asked to pay a fee of £495 which will be refunded if their claim is not successful.
The legal work was farmed out to staff at CCLS which was run by just one solicitor, Richard Burley.
His other firm, Burleys of Newark, has also been shut down.
There have been growing numbers of complaints, reported in a recent edition of Money Box on BBC Radio 4, from people who said they had paid their fee but had heard nothing more from Cartel, and who had been unable to get their money back.
The SRA spokesman said it was worried that the relationship between Cartel and CCLS was too close and might be against the best interests of the customers seeking to use Cartel's services.
"There is a huge question about the independence of solicitors who are dependent on one business," he said.
A Ministry of Justice spokesman said: "We are continuing to actively investigate Cartel."
"We are in contact with the SRA in view of the close working relationship CCLS had with the authorised business Cartel Client Review."
No-one from Cartel was available for comment.