Halliwells’ ex-managing partner: ‘I gave my life to that practice’
Exclusive: Ian Austin on Halliwells’ culture, job losses and his own exit
Ian Austin
Halliwells’ former chief Ian Austin has hit out at critics of his management of the Manchester-based firm, which went into administration last month, arguing that “we all bear responsibility” for the firm’s failure.
Speaking exclusively to The Lawyer, the 48-year-old former managing partner and executive chairman of the firm related that Halliwells’ collapse was a “bitter pill to swallow”.
“I’ve lost everything. I fought hugely. I’ll not have anyone question that commitment,” he stated. “I’ve always said that I stand up and hold myself responsible, [but] so does every single partner that contributed to the performance of the firm. I worked my bloody socks off for that firm. I put in £700,000.”
He argued that the financial difficulties that Halliwells experienced, which saw fee income drop from £87m in 2007-08 to £67m in 2009-10, lay primarily with the downturn in the corporate and property markets.
“At the end of the day we lost the best part of £18.5m to the downturn,” Austin said. “Moving to [new headquarters at] Spinningfields did add substantial cost, but when the decision was taken the firm was in a strong position. As a consequence of earnings dropping, partners decided to leave.”
Austin defended the disbursement of £15m of a £20m cash incentive from landlord Allied London to equity partners following the firm’s move into the new building, citing tax efficiencies as the rationale for distributing money at that point.
He added that, at the time of the deal, while the business was recording year-on-year growth of 16-17 per cent, external consultants thought the building would be “pretty full” in six to seven years on the basis of just 6-7 per cent growth. At the time the firm filed notice of its intention to go into administration on 24 June, occupancy was running at around 65-70 per cent.
“The decision to move into Spinningfields was a decision taken by a board, by external consultants [Sheppard Robson] in conjunction with group heads. This was not a decision of my own making,” he said.
But despite the firm’s reputation for having an ’eat what you kill’ remuneration system, Austin denied that partner exits were as a result of an individualistic culture.
“[That] bears no resemblance to the remuneration [structure],” he insisted. “People were judged on their ability to bring in work, not on what they killed and ate.”
Austin cited the announcement that the firm’s insurance team would leave for Kennedys in December 2009 as “the straw that broke the camel’s back”, as it represented £4m-£5m in fee income.
Austin also defended his decision to negotiate his exit to Heatons as head of commercial litigation before the final deal on the firm’s assets was completed and with the fate of 51 future trainees still hanging in the balance.
“I stuck by Halliwells to the death and I’ve taken this opportunity because it was the right thing for me,” he said. “I’ve been committed – I gave my life to that practice.”
Readers' comments (342)
Anonymous | 18-Aug-2010 12:25 pm
It is true, sadly for those who put their money in. What really got to me was that with a board comprised largely of corporate partners (with Ian as a compensatory litigation bozo), not one of them had the sense to apply the standards they advised their clients were necessary when looking at financial promotion/investment decisions.
Ian could therefore happily tell the Full Members one set of figures about cashflow and working capital whilst making completely different statements to the Fixed Share Members and potential Full Members, apparently completely oblivious to the legal implications of what he was doing.
No written accounts of any sense were produced - you were encouraged (should you have had the audacity to question what you were being told as a mere junior partner gimp) to speak to the FD who tried to make Ian's two set of statements match-up.
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Salutes the stand | 18-Aug-2010 12:27 pm
Its an utter disgrace to say the least. Sadly a sign of the times and the profession (whatever that means).
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Anonymous | 18-Aug-2010 2:16 pm
There probably -hopefully-will be litigation. The problem for the fixed share partners is that RBS is probably going to clear out the coffers of the defendants leaving nothing for them if they were successful in a misrep claim. Something needs to happen to make partners think twice about behaving this way again. Where is the SRA? Too busy to bother with commercial law firms?
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Lord Gnome | 18-Aug-2010 2:35 pm
Ian Austin features in the latest edition of Private Eye (20 August 2010) in his capacity as chair of the "University" of Salford's audit committee. It seems that they have been instructing Halliwells to threaten to sue students for libel.
Allegedly.
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Don't think they will be wiped out by the RBS | 18-Aug-2010 5:20 pm
If you look at the former Board they are a rich group of people and I doubt they would be wiped out by claims running to a couple of million.
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Anonymous | 18-Aug-2010 9:00 pm
@Lord Gnome
Not allegedly I'm afraid, given I was one of the students threatened!
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Group Action | 18-Aug-2010 9:14 pm
So there are 100 FSM's who put money in and they claim they were misled. So 100 people have a misrep claim. If each of those people put in £500 there is a substantial fighting fund.
Obtain some after the event insurance and instruct a litigator on a discounted CFA to bring proceedings against those who allegedly misrepresented the position.
whilst it seems unlikely that creditor pressure will clean out the Board members how satisfying would it be to see those who behaved in this way bankrupt?
Worth £500? I would think so.
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S | 18-Aug-2010 10:37 pm
So are you seriously suggesting that the managing partner of a top 40 law firm knowingly displayed one set of figures to one group of partners and an entirely different set of figures to another group of partners? If this is the case then there is a clear integrity issue and a report should be sent to the SRA. Excuse the pun but something does not add up here. There is a duty of good faith between partners and a solicitor is simply not permitted to behave in this way. Either this is a case of sour grapes and unjustified allegations or there is an extremely serious conduct issue to be investigated. Very disturbing
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Anonymous | 19-Aug-2010 10:31 am
@'S'
How else would so many people have been taken for a ride so unwittingly? These are intelligent people. The simplest explanation is misrepresentation. Remember Occam's razor
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Sir Galahad | 19-Aug-2010 11:45 am
Far be it from me to interfere on private grief, but if people are to make these people bankrupt, please refer their trustee in bankruptcy to S342A of the insolvency act (recovery of excessive pension contributions)
PS: what goes around comes around, but it might get there a little quicker with litigation
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