We didn’t expect to write quite this much about one firm, but this week former managing partner Ian Austin has gone on the record about Halliwells’ fate.
There are a lot of geeky questions for accounting specialists to wrestle with, not least the discrepancy in the financial results that were given to the outside world and those that have been revealed in a downbeat letter to creditors by the firm administrators BDO, seen by The Lawyer. It states that in the past financial year, the firm actually made a loss of £1.8m.
This isn’t a wrangle about profit recognition, and Ian Austin says he can’t recall any losses; after all, there’s a PhD thesis waiting to be written about the art of law firm accounting. Nevertheless, Halliwells was a firm bristling with pride in its macho PEP ratings and its speed of expansion; obsessed with chasing riches, it toyed with the idea of floating and its Spinningfields deal has entered legal market folklore.
In actual fact very few insiders seemed to know much about the finances, and the firm’s culture didn’t allow them to ask the questions – not that that ought to be much of an excuse for grown-up and well-paid equity partners. It’s worth noting that the financial director had left in December 2009 and was essentially replaced by a more junior financial controller, who was even less empowered to challenge the management.
Reporters making the simplest of enquiries would be threatened with legal action. Indeed, it became a point of honour among legal journalists to have received The Halliwells Letter. The charitable assumption must be that the Halliwells litigation partner who drafted it was not himself aware of the full extent of the firm’s financial nightmare. Either that, or the level of delusion within the partnership was greater than any outsider could imagine.
Halliwells partners are currently all blaming each other rather than taking individual responsibility, which tells you more about the partnership culture than any apparent losses figure.
This is what a law firm looks like when it’s all about the money. It’s not pretty.