Halliwells’ client money fiasco haunts new owners

SRA warns BLG, Gateley and Hill Dickinson of £500k liability

The Solicitors Regulation Authority (SRA) has sent a warning to the firms that acquired Halliwells, informing them that they could be liable for the client money shortfalls from the failed firm.

The watchdog has ­written to Barlow Lyde & Gilbert (BLG), Gateley and Hill Dickinson, warning them to fill the £500,000 black hole or face investigation.

The shortfall concerns client money disbursements due to be paid to barristers instructed by Halliwells. The firm’s accounts show a £305,000 shortfall in fees for barristers and £272,000 in interest.

The SRA letter, seen by The Lawyer, states that Halliwells could have been in breach of rules on how to handle client money for its own legal fees and client money for disbursements such as barrister fees. The two pools should be kept in separate accounts.

The letter was sent by the SRA’s law firm Bevan Brittan to CMS Cameron ­McKenna, which advises Halliwells’ administrators at BDO. The letter states: “The continued existence of such a shortfall does in the SRA’s view raise issues in the public interest as to whether the firm was properly managed and whether the trust the public places in the legal profession has been diminished.”

The regulator said it was unclear who was liable for the shortfall and urged that it was of “paramount importance” that the matter was resolved. It reminded the firms that there were “regulatory and disciplinary steps it can take in the public interest in relation to those whom it regulates”.

In a statement Gateley Manchester chief Rod Waldie said: “We’re extremely respectful of our obligations in respect of solicitors’ accounts rules. This whole matter is part of ongoing contractual discussions between the purchasers and the administrator.”

BLG and Hill Dickinson did not return calls for ­comment.

The news comes just weeks before Halliwells’ ­former landlords at St James’s Court in Manchester go to court over unpaid rent owed by partners.

A three-day summary judgment hearing has been set for 20 June, with four partners who were personal guarantors of the office – Ian Craig, Christopher Phillips, Paul Thomas and Matthew Wightman – named as defendants. Rent had been guaranteed on the premises until 2013, despite the firm vacating the offices in 2007.