Optima reprimanded by the SRA over Capita investment

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  • SRA not really on the ball here - attacking a structure that the SRA itself will allow - and help regulate - from Oct 2011, meanwhile allowing law firms such as Halliwells to run riot in terms of how they were managed that did real damage to people and the profession. Seems to me the SRA is more worried about being a jobsworth-style, pedant over timelines than looking at truly negative behaviour of some law firms. Another own goal from the SRA and surely they could have come to a more sensible conclusion than dismantling the whole Optima deal?

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  • So the sum total of this is the the SRA are saying "you cant do this - YET! - but if you wait 14 months you can" At least Optima have the benefit of now being at the forefront of ABS having been through it once.....

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  • As an ex employee of this firm I can confirm that it did seem to me that Capita were all but running the show and I always had grave doubts as to the legality of the arrangement in the context of the profession as a whole.
    This seems to be backed up by the ex CEO of Optima, Adrian Lamb putting in his linkedin profile that his previous employment position was CEO of Capita Group Plc Legal Services Division and with no mention whatsoever of Optima Legal Services.
    Knowing what I do about Optima I am disappointed that the SRA only reprimanded the Partners on this occasion.

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  • So the whole Optima multimillion pound empire was built on a mountain of debt and breaches of the solicitors rules.
    I bet Anthony Ruane & Co must be really upset at the hefty penalty set down on them by the SRA.
    Yes the SRA will allow and control ABSs from October 2011 but that is not an excuse for Optima to have run an ABS since 2007 when all the rest of the solicitors firms are trying to stick to the rules. We could all have cheated to build our empires and destroy the competition but some of us have more scruples

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  • If anyone would like to invest £35m in my firm I think I can still scrape together the SRA £7K get out of jail free fee...

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  • There is no suggestion it seems of any cause for concern regarding the legal services provided and that is both reassuring and supportive of the notion that such arrangements will soon be not only feasible but also unlikely to do any disservice to clients (there will be mistakes of course because humans are involved...and long may we remain so). Properly funded, properly managed...are these not among the shortcomings of traditional firms that the LSA was intended to address so as to provide a competitive market in which costs can come down without a decline in service?

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  • The SRA have serious issues to address in establishing a consistent and transparent policy for regulating solicitors firms in the pre-ABS environment. Their starting point that any firm borrowing money to finance itself compromises its indepedence thereby breaching Rule 1 is flawed. Many law firms borrow money, the critcism of this by the SRA overlooks commercial realities. Optima may have over-stepped the mark but many other firms have not and yet still find themselves engaging with the regulator in an unnecessary and costly debate about commercial convenience and professional propriety.

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  • Peter Rouse is missing the point. These people are breaking the rules even before they are permitted to run an ABS. What chance has the public (who the rules are designed to protect) that they will comply with the rules in future?

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  • Optima first came into being in 2006 funded by Capita. This has been going on for four years now. As a direct result of Capita's non arms length investment Optima have now grown to what their ex CEO (who we now find to have been employed for the last four years by Capita as the CEO of their Legal Services Division - (although they don't actually own up to having a Legal Services Division in their annual report)) proudly boasts to be "the largest volume legal services operation in the UK".
    Hubris! Presumably Optima must have been made to provide evidence to the SRA of their actual ability to repay the loan to satisfy them of their solvency otherwise we could have another Halliwells scenario on our hands. I am lead to believe that they are already making cutbacks and that they might not be taking any trainees on next year. This is third hand info and as such I can't vouch absolutely as to its veracity.
    One thing though, this quote from Capita suggests that they might resume the money drip at a later point “Optima continues to be a successful business in which we’re comfortable to invest.”.....
    Lets hope the SRA will be monitoring the situation carefully.

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  • Wasn't that long ago that Ruane was bragging about their set up being the only sustainable business model. Built to last..........we'll see.

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  • This is unfortunate to say the least. As others has already commented Halliwells mismanagement goes unpunished but perhaps of greater importance is the financing deal was set up in such a way as to contravene regulations. Given the impending law change scheduled for 14 months hence alternative funding options were available. Prodision of external finance to law firms is not exactly rocket science; why not use them as others have.

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  • As for the trainee point - the Bradford 'Head Office' never took on trainees until Optima 'merged' with McKeags (effectively a take-over given all the redundancies that followed). As McKeags had training contracts, it was agreed that Bradford could... however they immediately announced that they would no longer be doing them at the Newcastle office... Cutbacks!
    I to am annoyed that only a reprimand was given to the partners... The way that Optima was run by Capita was a disgrace (and it did indeed seem that it was run by them)!
    I left their employment as I was completely changing career, however I was unimpressed with the merger and the outcomes that arose and I know many people who left for similar reasons, or were made redundant, whilst overtime was made compulsory to meet demand...

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  • You have to really ask the question is the SRA ,fit for purpose, and in the new regulatory regime when firms have a choice why would you choose. Any truth in the rumour "Optima" will soon be going down the road to Chelmsford to join the CLC who recognised years ago the world has moved on from the Quill Pens and allow external investment.
    All the best Anthony and enjoy the pay rise.

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  • Reading the comments above it makes one wonder what lawyers are most focussed on: delivering a good, cost-effective service to clients, or worrying about how a legal services business is funded. Frankly, I don't mind how lawyers fund their business, no more than I mind whether my bank is owned by a partnership, public shareholders, or a company etc. I want the service, that's all. If Optima can give a quality service with its funding structure, then good. Lawyers clapping their hands that a 'new entrant' has been driven out of the market just seems like protectionism and is very short sighted. Better to consider how you will compete in the future rather than looking to the SRA to protect the market for you.

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  • What gets me is that all of this now seems so blatant.
    Adrian Lamb – ex CEO of Optima is now touting himself on Linkedin.com as having been the CEO/FD of Capita Group Plc for the past SEVEN YEARS (2003-2010). His profile does not now contain one single mention of the word “Optima” yet, just two months ago, before this broke, the complete opposite was true. His profile said he was CEO of Optima Legal Services with no mention of the word “Capita”! You can still see remnants of the old cached profile heading by doing an advanced Google Search on the phrase “Adrian Lamb” and include the word “Optima”.
    I see that no action is to be taken against Capita as they do not fall under the jurisdiction of the SRA or FSA however, is not Mr Lambs profile a smoking gun? He says that he was CEO/FD of their “Legal Services Division” however, according to Capita’s annual report, they have five divisions but no Legal Services Division. Have they, a public company been hiding a whole division from their investors? Also, do they now need to publish the details of the loan repayment details with Optima?
    For what it's worth, my recollection is that when our employment transferred in May 2006 from DLA Direct Llp – (owned entirely by DLA Piper) to Optima, we came under the umbrella of Capita Insurance Services and that Optima were accountable to a chap called Max Pell.
    It’s interesting that Lamb claims he “built the business” from “also ran player”……. I wonder how DLA Piper will feel about him describing the business and clients bequeathed to Optima in return for Capita’s first tranche of money as “also ran” status. Also, this bit about him having served Capita Group Plc as CEO/FD for SEVEN years is puzzling. I remember that for a couple of years before Optima came into being, Mr Lamb was the boss of the accounts function at DLA Piper’s Bradford Office (which later became DLA Direct Llp and, then, Optima).

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  • All in all, a bad couple of months for Optima then when you factor in the derailment of the HIPS gravy train and now this!
    I wonder who the unfortunate Barristers were who advised on the deal and whether Optima's "flagship" Professional Negligence team will be looking at it....
    The share option plan envisaged Capita purchasing Optima for £1.... I am dying to know what the terms of repayment to Capita are and what assurances have been given to the SRA on solvency!
    This episode reminds me of the legend of the flight of Icarus.
    Some would say that any schadenfreude heading in Optima's direction is well earned! I couldn’t possibly comment

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  • Capita ... Is that the same Capita to whom the SRA has outsourced management of the ARP? This all begins to look a little circular ...

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  • Oh Graeme - move on...PLEASE!!!!

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  • Re The Client's comments - you may very well not care where the funding has come from (we know that from the fact that the government has recently had to bail many of you out and yet you still try to dish out bonuses), but we are regulated by the SRA and like to all play on a level playing field.

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  • Here is the SRA report in full.

    http://www.sra.org.uk/consumers/solicitor-check/155841.article

    Note that the partners have been SEVERELY reprimanded as opposed to just reprimanded.

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  • It comes as absolutely no surprise to me. Every dog and all of that. Maybe Tesco will loan them the money to pay off the loan and conveniently in time for the legal services bill

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  • I am appalled by the behaviour or Robinson and Ruane. They got off because they got advice from their own profession prior to acting wrongly. Disgraceful. I have no doubt that they and Adrian Lamb who left Optima shortly afterwards, knew the error or their ways. Optima exudes an inflated sense of its own importance. Sadly I suspect that this debacle won't provide the reality check required for them to remember they may work in the legal industry but they aren't actually immune to the law!

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