Cloud cuckoo brand
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.
Readers' comments (9)
Ex Halliwells Partner | 3-Aug-2010 10:31 am
Well said that lady. Spot on.
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Anonymous | 3-Aug-2010 11:10 am
And Catrin, you and your colleagues bear no responsibility for creating an environment in which Firms are pretty well compelled co operate with your young and often not-so-bright researchers in hyping up the numbers ? Come on. You started this.
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Catrin Griffiths | 3-Aug-2010 12:08 pm
@Anonymous, 11.10. I think you're right up to a point, but I'm not sure you can blame the reporting of profit levels - which is what all business journalists do on a daily basis - for what happened at Halliwells.
In putting together The Lawyer UK200 we do spend a lot of time collating all sorts of stats such as revenue per lawyer and earnings per partner, the latter being a truer reflection of partner remuneration. And despite these equally meaningful benchmarks, PEP remains the most emotionally effective tool at any leadership team's disposal, whether it be internally managing performance or externally in the lateral recruitment market.
In any case, to say we started it is to ascribe a greater degree of influence over lawyer behaviour than I think legal journalists have. City lawyers in particular are far more influenced by the fact that their investment bank/hedge fund neighbours are making what they see as serious money, while magic circle partners measure themselves against the rest of the transatlantic elite. Halliwells, of course, is a different case again..
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Scep Tick | 4-Aug-2010 4:46 pm
"PEP remains the most emotionally effective tool at any leadership team's disposal, whether it be internally managing performance or externally in the lateral recruitment market."
Emotionally effective, yes; from a business sense, surely things like revenue per partner/fee earner are far more relevant? After all, you can double PEP easily by halving the partnership, it doesn't reflect any management skill, whereas revenue per fee earner does. If the partners measure themselves against bankers, then they should be bankers rather than lawyers.
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Anonymous | 5-Aug-2010 0:21 am
Those who have received "the Halliwells Letter" might now be tempted to send a copy to the SRA, together with a copy of the BDO report....
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Anonymous | 5-Aug-2010 10:44 am
You cannot lay any of the blame for the collapse of the firm at the door of journalists, that is just plain daft. The only people responsible are the partners; it was after all their business.
If Mr Austin's comments in any way reflect what was the prevailing ethos at the firm, then no wonder it went down. Having read those comments, I can't understand how any business would want to pay for his advice.
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Anonymous | 5-Aug-2010 8:06 pm
Those PEP figures they gave out to the press were rubbish. 1.8m losses = no profit distribution.
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Anon | 5-Aug-2010 11:13 pm
Come on Catrin - publish The Halliwells' Letter, so we can all have the laugh you clearly did on receiving it!
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Kevin | 11-Aug-2010 3:20 am
I worked at a place like this; it felt like Soviet Russia inside. All dissent was bullied away. Mediocrity reigned supreme.
The firm in question still appears to be profitable but one always wonders if it could go the Halliwells route...
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