BDO demands return of cash from ex-Halliwells partners By The Lawyer 19 June 2011 00:00 17 December 2015 14:50 Sign in or register to continue reading. It's FREE Sign in Email Password Keep me logged in Forgot your password? Not registered? It's FREE! Register now Register with The Lawyer Anonymous 20 June 2011 at 08:34 Surely the mediation is with their ex-wives who now have the cash……! Reply Link Anonymous 20 June 2011 at 08:47 Are they shameless? Reply Link Anon 20 June 2011 at 09:21 This transaction was unlawful for so many reasons. First, it was a breach of the LLP deed. The deed imposed an obligation on all members to act towards every other member in accordance with utmost good faith. Trousering £20 million without telling the FSM’s was a clear breach (just ask yourself if this would have been a fact which a reasonably prudent FSM would have wanted to know). If taking the money out really was in good faith in the best interests of the business, why did every single one of those involved keep it a secret for so long? Second, it was a breach of the general duty to act in good faith in the best interests of the LLP. Is the LLP in a better or worse position after you take £20 million out without telling the other partners? Is this really going to promote the long term interests of the business? Let’s hope that the Insolvency Service considers disqualification proceedings against those involved, or the SRA begins disciplinary proceedings. They need to ask themselves whether Is a single one of the individuals who took the money a fit and proper person to be a solicitor. Anyway, they’re only being asked to pay back what they took out. Unlike all the people who were paid a fraction of what they “earned” who lost their jobs when the business went bust, and unlike the creditors who didn’t get paid for what they supplied. Reply Link Anon 20 June 2011 at 09:30 32 tasteless houses in Cheshire for sale. Going cheap. Free Bentley with each one. Reply Link Multiple miggs 20 June 2011 at 09:37 I bet they papped their pantaloons when they got the letter Reply Link Po 20 June 2011 at 10:12 And they advise business people? Total lack of credibility Did nobody think about their duties to the llp? I suppose naked greed won the day Austin got a 50k bonus for doing such a good deal. That just about sums these spivs up Reply Link Its all in the details 20 June 2011 at 10:14 Whilst this article picks out 15 partners who were still with Halliwells at the end, most of whom appear to have gone to Gateleys, by my reading there were another 17 partners who received the kick back and then immediately jumped ship? Atleast the 15 were still bringing work in to the business that gave them the ludicrous pay out. Those 17 raped Halliwells for what they could get and then legged it. Name and shame them please The Lawyer, I for one would like to know who they were and what firms they are at now! Reply Link Anonymous 20 June 2011 at 11:11 totally shameless – I’ve seen the drunken punchups between 2 of those Gateley Manchester equity partners. Reply Link Anonymous 20 June 2011 at 11:18 there is no way this can end good, lets hope it ends fast. Reply Link Anonymous 20 June 2011 at 11:22 Limitation Act defences? Reply Link Anonymous 20 June 2011 at 11:25 financial penalties aren’t enough for these wide boys Reply Link Anon 20 June 2011 at 12:04 ow call me a cynic (hears chorus) but couldn’t this just be a ploy by the administrators to ramp up their fees? Now corp law isn’t my thing but I can imagine this being a bit harder to deal with than a rear end shunt. Asking for £20m is easier than receiving it. Reply Link Anonymous 20 June 2011 at 12:27 re Anon at 12h04 You are a cynic. BDO have a very reputation, stop smearing them with filth. Focus your cynicism on the Ex Halliwells Partners – they deserve it. Reply Link Anonymous 20 June 2011 at 13:17 Oh to be in Gateley’s board room…… Reply Link Interested Observer 20 June 2011 at 15:02 Wasn’t there an earlier report in The Lawyer that four ex partners in Halliwells guaranteed the rent on their offices, and were being sued for it. As I recall, an application for summary judgement was starting on 20th June……………………….. Reply Link anon 20 June 2011 at 15:08 The problem the ex-Halliwells partners have in defending the transaction is the failure to ensure that the partners receiving the funds were locked in to the business. I don’t see how they can successfully defend this transaction as a result of this. There have been rumours about the then FD receiving a payment from the reverse premium. It would be interesting to learn whether this was the case and if so whether the administrator will be pursuing him. Reply Link Rural bliss 20 June 2011 at 15:50 “The letter invites mediation in relation to a transaction entered into more than six years ago …” “As an incentive for the firm to take the lease it was given part of the building’s freehold, which it then sold to Allied London in 2007.” How is 2007 more than six years ago? Is Mr Waldie speaking from the future? I think we should be told. Reply Link Anonymous 20 June 2011 at 17:50 Ref rural bliss above; they bought the building off plan and agreed the deal a couple of years prior to completion, the payment being made once the lease completed following completion of the building. Reply Link Anonymous 20 June 2011 at 17:50 All in all a very harsh reaction I think. The freehold was an asset to the partnership as an incentive as part of the move. An asset that they were entitled to sell (again, as part of the LLP). Mediate it to the hills boys – you were given a very lucrative asset, and one which was exercised at the top of the market, Fair game! As for giving it back…… thats business BDO, would you? Reply Link Anonymous 20 June 2011 at 18:25 public flogging in spinningfields – any votes? Reply Link Anonymous 20 June 2011 at 18:39 so the Tuscan palazzo, the Cumbrian lakeside retreat, the Spanish pool and the Aberdonian castle are up for sale are they? Reply Link Anonymous 20 June 2011 at 21:04 I don’t see why they should pay it back, or why they should have left the cash in the business. It’s their business, and that business received a serious amount of cash it did not need at the time, so they extracted it, as they were entitled to do as the owners of the business. Unless it was illegal to extract the cash as they did (similar to restrictions on dividends only being payable out of distributable reserves at the time) the administrators will struggle because of limited liability and the limited scope of the clawback provisions in the insolvency act. Reply Link don't tell Paul 20 June 2011 at 21:12 Paul Thomas joined Gately Wearing as a consultant but left when he found out that his fellow partners had all resigned from Halliwells LLP leaving him to carry the can on the St James’s Court lease. Classy move by the former Halliwells partners. Tax advice anyone? Reply Link A small fact 20 June 2011 at 21:29 The £20.4M was not distributed amongst its equity partners. The Fixed Share Members had one twentieth of a point which means they were also equity partners albeit on the same basis as somebody holding a few shares in a PLC. Do you lose your right to dividends, your right to notice of meetings and your right to vote if you only hold a handful of shares? Of course you don’t but the Halliwells FSM’s were not even told about the deal with the Landlord and certainly didn’t receive a few measely grand despite the fact that they held equity. Giving up the .4M would have hurt the full members too much so they decided to try and keep it a secret. Bet the FSM’s are glad they didn’t get any of it. Reply Link Ashley Balls 21 June 2011 at 00:26 If these circunstances were posed as part of examination question they would be considered fanciful and unbelievable. The real sadness is the firms who took on the ex-Halliwells partners. Was any digging done at all or were the hard questions simply not asked. Reply Link dun soliciting 21 June 2011 at 06:43 No doubt the new firms will arrange loans to these characters to repay the money, or pass the hat round? They won’t want the embarrassment of this. Reply Link Interested Observer 21 June 2011 at 15:53 Ashley Balls | 21-Jun-2011 0:26 am If these circunstances were posed as part of examination question they would be considered fanciful and unbelievable. The real sadness is the firms who took on the ex-Halliwells partners. Was any digging done at all or were the hard questions simply not asked. I suspect that the other firms were only interested at the time in how many files and clients they were acquiring. In any event, the partners would probably have denied all knowledge of what had gone. In many cases it would have been correct. Reply Link Anonymous 21 June 2011 at 17:03 Interested Observer – None of the partners who went to BLG or Hill Dicks participated in the Spinningfields payout. One of the main reasons the partnership split into different practices was that the partners who didn’t participate in that awful transaction (and didn’t know about it) could no longer be in partnership with their ex-colleagues once their duty to the LLP, clients and their staff had been carried out. I’m sure a number of very good partners who are untainted by this transaction could have bailed (like many others both Spinningfields and Non-Spinningfields did) but their sense of right and wrong was clearly better tuned than others. In answer to another question posted, the leaving spinningfields partners went to different firms, Fladgate, DWF, Kennedys, Pinsents etc etc. Reply Link Anonymous 21 June 2011 at 17:09 in response to Ashley Balls BLG have got a good department out of it, it fits into their existing service provision and will perform well if Kevin focuses and Damian delivers. HD are dominant in the North West and will develop more strength on the back of the purchase of Halliwells Liverpool and bits of Halliwells Sheffield. There is history and friendship between the key Partners involved. It will work. The HBJGW deal was a joke. No “due diligence” was done. It was the tragic consequences of greed (Dudley) and desperation (Manchester). Anyone with any sense wouldn’t have agreed to it . But don’t underestimate the Partners in Manchester. Austin, Thomas and Craig aside, there is a lot of good hardworking partners there. Reply Link Anonymous 21 June 2011 at 19:05 Does anyone actually have specific details of the basis of the claim though? I agree the 5.50pm 20 June comment : how was this payout not legitimate? It was their business that had cash. Why can’t they pay it out? They have have breached duty to the FSMs but it isn’t the FSM making the claim as far as we can tell…… Reply Link Posh 21 June 2011 at 19:26 What else do you expect from a law firm named after one of the Spice Girls? Reply Link Manc street preacher 21 June 2011 at 21:57 Surely these reports need balancing? It must be time to ask affable Ian Austin for another interview. He was the one who negotiated the deal with the Landlord. Alternatively why not ask blunt speaking Alec Craig? He was the one wandering around the firm saying “this firm won’t go bust, we have a good business”. Blunt Alec is rarely seen whilst affable Ian seems to have quelled his enthusiasm for talking to the press. I wonder why? Reply Link Anonymous 22 June 2011 at 09:12 @ anon 20-06-2011 5.50pm As far as my understanding is they never owned the freehold. They received a “reverse premium” from their landlords to take out a lease. The only time a landlord would consider handing out one of these when times are good is if the tenant has signed up to some particularly onerous terms… Reply Link Anonymous 22 June 2011 at 12:41 Do you people not get sick and tired of talking about the same old rubbish??? For god sake give it a rest and think about the impact that this will have on those who have managed to keep their job with one of the companies! BORRRRRRRRRRRRRRRRRRRING. Reply Link Anon 22 June 2011 at 15:22 Anyone want to guess the identity of Anonymous at 12.41 pm? Perhaps a former Halliwells employee who continues to be very close friend of one of the owners of the Tuscan palazzo, the Cumbrian lakeside retreat, the Spanish pool or the Aberdonian castle referred to yesterday? Anyway, sorry if you’re bored but the biggest law firm collapse of recent years is of interest to some of us. Reply Link Anonymous 22 June 2011 at 16:04 Is there any news of the £4M summary judgement application, for the personal guarantees given by Alec Craig and three others for unpaid rent on St James’s Court, which is being heard this week? Reply Link Interested Observer 22 June 2011 at 17:28 Has anyone else noticed how rubbish the reputational management is by lawyers? Whenever a firm is brought to the ground, or a partner caught nicking money, two crass techniques are used. 1. Endless posts about what a gentleman Mr. Tealeaf is how it must all be a dreadful mistake. 2. Bullying drivel of the “have you not got better things to do” kind. Can’t someone come up with something a bit more sophisticated? Reply Link Anonymous 22 June 2011 at 17:30 Anonymous at 12:41pm sounds suspiciously like someone mid-divesting himself of assets in Switzerland and Angelsey…. Reply Link Interested Observer 23 June 2011 at 11:44 Does the SRA show any interest in all this shenanigans? If a clapped out two man operation in Barnsley High Street, had run the firm as Halliwells did, they’d be up before the SDT by now. How come the big lads get away with it all? Reply Link Robert Shaw 23 June 2011 at 16:46 I have read a few of these posts and as an outsider what shocks me is the level of animosity from people I don’t know directed against people that presumably they didn’t know….and all of it posted anonymously. Maybe not all of the posts are by lawyers but it certainly doesn’t say much of the ‘professionalism’ of the profession. And I am not, before the posts start, connected to any of this business. I am unimpressed by what I read about the conduct of some of the former Halliwells partners and I do believe the failure of a major law firm is of general interest (as are the reasons for it ) but a lot of this is unsavoury and has little to do with improving the profession. Reply Link Anonymous 24 June 2011 at 13:33 response to Robert Shaw If you had lost money due to your employer going bust you would want to vent your frustration too and I daresay use this or any other forum which you found in which to do it. You should spare a thought for the former employees of Halliwells who were totally shafted by the Partners. Reply Link Anonymous 24 June 2011 at 15:32 To Robert Shaw (23/6 @ 4:46), I think that you are missing the point. The animosity comes from the activity, rather than the people involved. In previous cases (the Hogans Partner, Ince & Co Partner) defenders of them were defending their actions on the basis that they were “really nice” or “jolly good chaps”. Frankly, it doesn’t matter a damn what they were like socially or around the office; they nicked £1M and £1M+ (respectively) from their Partners (mates) / Staff / (potentially) clients. This is little different – it is at the “sharp” end of legal practise and whether it is illegal is yet to be seen. The profession should be improving its own PR by not engaging in these acts and therefore creating this disgust against the profession. Reply Link Anonymous 24 June 2011 at 17:07 It isn’t just the equity partners involved in the £20m reverse premium that are being chased but fixed share partners too. One such ex-partner has just received a letter that has gone out to all such partners stating that he owes circa £70,000 and has to pay up pronto! This person knew nothing of the financial woes nor the £20m and the £70k is drawings which was just basic salary (ie not a bonus) so this person is being pursued for their salary over a certain time period. How is that fair? In all likelihood this could result in bancruptcy, not being able to practice and therefore no job. Aren’t there about 100 or so fixed share partners who will be in the same position? Reply Link Robert Shaw 27 June 2011 at 15:15 I have just looked at this page again and I despair at more anonymous posts. Having said that, I think the 5.07pm comment is fair in that it reflects my understanding. I believe it was a group of a dozen or so inner circle equity partners that took the money out of the firm and that the other partners knew nothing of it until after the firm went into insolvency. If that is true then it seems unfair to blame all partners. My concern is that there seems to be a lynch mob mentality to matters that none of us really understand and weren’t party to. We are turning into tabloid journalists – all of us. Reply Link Anonymous 27 June 2011 at 16:43 24.06.11 at 5:07pm is bang on. A large group of FSMs were kept completely in the dark by the full members. They were not party to the reverse premium. They were not even told about it.They were strong-armed into making significantly increased capital contributions during 2009. When they raised questions about the state of the business before doing so, they were given highly misleading information. They were not partners in any real sense. Now, that group find themselves on the receiving end of demands for huge sums of money from administrators, founded on the basis of losses incurred by others without their knowledge. Something is very wrong here. Reply Link @Robert Shaw 28 June 2011 at 07:09 I suspect the reason for all the anonymous commentary is that a lot of the people (including me) have had prior experience in dealing with Austin et al. Remember we are talking about a law firm which once threatened to sue somebody for slander when a partner overheard two solicitors gossiping on a train. In some cases the lynch mob mentality is thoroughly justified. You claim you have no connection to Halliwells and I do hope you never have to deal with some of the less affable partners that wrecked the place. Do you not see an issue for serious alarm that Austin is now the Head of Audit at a public charity (Salford) with an annual income of £200m? What qualification does he possess to judge on issues of risk management or financial probity? This is nothing short of a public scandal. Reply Link Anonymous 28 June 2011 at 08:03 Robert Shaw, I think you’ll find that a lot of the people posting know a great deal of what went on. The website’s called The Lawyer, so attracts many lawyers. Halliwells used to employ a lot of lawyers. The animosity comes from our familiarity with what went on – the greed, the dishonesty, the manipulation of people from junior partners to support staff and outside suppliers. The reason for anonymity is because we still have careers and want to be free to say what we like. By all means take the moral high ground if it makes you feel better but I doubt you’ll get much credit from most of the people more directly involved. Reply Link Robert Shaw 28 June 2011 at 17:03 I can feel the mob turning on me ! Seriously though, I don’t defend the wrongdoing and I agree with those that want the miscreants brought to book. I have criticised those that post vitriol anonymously (not everyone) because it presents the profession in a bad light but I accept that greedily breaching fiduciary duties and duties of good is even worse. My starting point was, to pick up on the theme of some more recent posts, to suggest that criticism and censure should be directed at the few who are guilty rather than at anybody that was in the wrong place at the wrong time – if I understand what I have read, somewhere between 15-20 of the 100 odd partners took the reverse premium? I wonder how many of us would know if something like that was happening at our firms if it was being done behind closed doors. Reply Link Retribution 28 June 2011 at 20:19 32 took the reverse premium. A dozen of those went to gateley waring and as part of the deal with the administrator they included the transfer of their overdrawn current accounts. These same people made representations as to the financial well being of Halliwells prior to strong arming the fsm’s to contribute capital of 20k each. Those fsm’s have now lost their capital and are being pursued by the administrators for 6 figure sums. The reverse premium crew are not being pursued for their overdrawn current accounts. This is an absolute disgrace. Those who wrecked the firm and lied to the fsm’s are sitting pretty whilst hard working people who did not take the reverse premium are hammered. Very very wrong Reply Link Anonymous 29 June 2011 at 10:27 Lots of talk about the FSMs being legged over because they were told this or that or not told this or that. Would they advise a client to deal on that basis? How about checking the position themselves? They were presented, I suspect with an equivalent of ‘take it or leave it’ and they chose to take it. Tough life isnt’t it…. Reply Link Anonymous 29 June 2011 at 12:01 10:27 misses the point. No doubt the position was “checked”, but just how far should one group of, junior, partners go to satisfy themselves that they are not being shafted by another group of partners? I suspect you would advise your clients to take reasonable steps to satisfy themselves that they have sufficient information to make an informed choice, would you not? Perhaps that is precisely what the FSMs did. “Retribution” is on the money. Reply Link Tim 29 June 2011 at 14:09 Let’s see whether the management board and head’s of department are sitting pretty in 3 month’s time. Reply Link Anonymous 29 June 2011 at 17:14 of course the management board and heads of departments at Gateleys Mancheter will be sitting pretty in 3 months time – you don’t actually think a coup d’etat is likely do you? Moreover the Dudley cowbys aren’t managing them at all – its not arms length, its not arms anything, its a joke. Reply Link Amused 29 June 2011 at 19:31 I think the sra and the liquidator will ensure they aren’t sitting pretty. Reply Link Anonymous 30 June 2011 at 09:46 It will be interesting to see if BDO (and ultimately the Court) take the view that liability in this case is joint and several. Reply Link Anonymous 30 June 2011 at 10:43 I find it most unlikely that the SRA will take definitive action. As recently said, it is more likely that a 2 man team in Bradford high street is closed down by the SRA than a large North West firm. They will be fined, some may face brankruptcy but they will soldier on. Reply Link Anonymous 30 June 2011 at 18:11 The above post about the SRA is spot on. You needn’t fear them if you are a large firm. However, if you are a partner in a small firm then dealing with the SRA is a bit like dealing with the Spanish Inquisition. Reply Link Anonymous 30 June 2011 at 19:39 I don’t have much sympathy with the fsms. If its anything like my firm they do anything to climb up the greasy pole and would vote to kill the first borns if it was put to them at the annual partners’ meeting. Pathetic! How can they claim to know nothing? They are all supposedly talented lawyers? They took their drawings from an effectively insolvent firm and should repay those drawings. Transactions to defeat creditors anyone? What about all those barristers and suppliers like the sandwich guy who never saw a penny? How can Austin really keep his job at Salford? Reply Link The truth will out 1 July 2011 at 08:48 I bet they are all regretting appointing Ian Austin and letting him negotiate with the Landlord. As the landlord is a significant creditor he will no doubt relish telling the administrators how Austin kept coming back for more. What if we take it for 25 yrs? What if we pay top rent? What if we take more space? How does that look in terms of a reverse premium for the partners, err err members? Actually just the full members, we aren’t telling the fsm’s. Great work Ian, you were well worth your 50k bonus for doing such a great deal. Reply Link Jesus 1 July 2011 at 14:09 There are a number of really ignorant comments on here. The worst is the idiot who has suggested taking drawings might be construed as a transaction to defeat creditors. Go and read a book son or stick to something where you don’t need to know anything about the law. Personal injury rear end shunts for example. God knows what the damage you are doing if you are not a trip and slip merchant. Reply Link prestbury bentley dealer 1 July 2011 at 19:56 the FSMs – at least those who didn’t go to BLG/Hill Dicks and Gateleys – have been ‘asked’ by BDO to refund all of their drawings for 09/10 on the basis that they couldn’t withdraw profit as the firm wasn’t in profit. Anonymous at 7.39, yes some were ambitious. A lot were just decent people making a living – and a very modest one compared to Austin and his cronies. When they took their drawings they were being carefully and deliberately lied to. Reply Link Anonymous 1 July 2011 at 20:56 there is a point though, Jesus. Its overstated in the post you refer to, but the FSMs really shouldn’t be protesting as much as they are. They were partners. They chose to join the partnership without verifying the financial position of that business in a way they would have advised a client to do. Its all very well to say they did what they reasonably could by asking management, but that assumes the desire for partnership overrode commercial good sense. It shoudn’t have Reply Link Anonymous 3 July 2011 at 20:08 it seems that lawyers the world over have yet to understand the difference between cashflow and profit. maybe some basic finance lessons are long overdue…part of the training programme? Reply Link Anonymous 4 July 2011 at 11:33 8:56pm- when the vast majority of the FSMs who are now being chased for repayment of drawings became partners, the partnership’s finances were in a very healthy state. Decisions taken subsequently, in secret, by the full members, changes that. It really is as simple as that. Reply Link Homer Simpson LLP 6 July 2011 at 17:07 If there was ever justification for bringing in outsiders to run law firms and ABS’s then this is it. Lawyers do not great business people make, even though they think so with their fancy MBAs and enormous egos Reply Link Brian Dean 10 July 2011 at 08:57 The SFO have prosecuted many partners and company directors for Fraudulent Trading. They are probably keeping a close eye on this so any attempt to mitigate personal loss through mediation may be seen as an additional attempt to defraud creditors Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.