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 | 3-Aug-2010 11:29 am
After presiding over the demise of a big firm in such spectacular fashion, I'd expect Mr. Austin to be in hiding somewhere, not coming out with a lot of self serving drivel as to how millions were trousered for reasons of tax effiency.
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Anonymous | 3-Aug-2010 12:10 pm
Credit where credit is due. Ian Austin has at least been prepared to give some comment to the press. What has happened to that star of the legal profession Alec Craig? Would he perhaps care to give us the benefit of his wisdom on the subject of his role as senior partner?
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Anonymous | 3-Aug-2010 12:36 pm
"If the writing was on the wall in December 2009 how does he explain recruitment and promotion of partners up to June 2010?"
I assume the partners made up internally were fixed share equity partners/members. I assume lateral hires were a mixture of fixed share and equity. Fixed share equity partners/members are essentially salaried partners, but they lose employment protection as fixed shares, so can be dismissed unfairly, discriminated against, made redundant etc without redress, which can prove very useful if you think the ship might well go down, since you can limit employment claims by the longer-serving and better paid associates.
Also, old-style partnership deeds invariably had a "good faith" clause in relation to dealings with partners, but LLP agreements often don't, so it probably isn't an SRA matter that fixed share equity partners/members weren't told about the property deal.
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Anon | 3-Aug-2010 12:53 pm
I'd like to see panorama investigate this guy... anyone got any contacts at the BBC?
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Anonymous | 3-Aug-2010 1:04 pm
Credit where credit is due !?
By giving the defensive and combative interview that he gave, all that Austin has done is demonstrate the extent of his poor judgement and complete lack of self awareness.
The man was at the helm of the biggest financial failure of a law firm in the UK ever and a very big reason for that failure is that Ian Austin was hopelessly in above is head. I am pleased that he has found a home at Heatons because this is the size of firm that he is suited to - just as long as they keep away from any management functions.
By the way, I note that Ian Austin does not comment on the firm's failure to lock in partners that trousered the reverse premium or on the number of senior partners that left the firm shortly after they received the reverse premium. There are only two possible explanations for this:- either those leading the reverse premium decison making process (includes Austin and Craig) (1) deliberately wanted the option of exiting shortly after they received their ill gotten gains or (2) were too stupid to appreciate the risks of partner departures. To be frank, I am undecided which of the two options applies because both are equally feasable given the characters involved.
Interestingly, Austin also does not dwell on the shamefull campaign that he conducted in 2008 trying to persuade (or, perhaps, some would say bully) junior fixed share partners into making capital contributions to the firm - apparantly to give those junior partenrs a greater sense of ownership of the firm. Yeah, right, ownership of a verly large terd that was the progenny of Austin and Craig! At least the management had chutpah. If I remember correctly, the rate at which junior fixed share partner capital contributions were structured made an equity point approximately 50 times more expensive in the hands of a fixed share partner as compared to an equity partner.
What more can I say - I spent a couple of years at Halliwells and enriched my vocabulary with two words that I had never previously used:- "spivvy" and "trousered" - something for which to be grateful to Mr Austin.
BTW, referring to an earlier posting, to call Ian Austin a clown is to do a disservice to clowns.
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Anonymous | 3-Aug-2010 1:27 pm
a classic case of a firm and its constituent parts (still) believing its own hype. I am ceratin they felt untouchable. They wanted to rival the prestige of their established peers but were prepared to cut corners to get there.
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Mr Witness | 3-Aug-2010 2:02 pm
While Stone Cold Ian Austin seems to be taking a lot of the heat - I'd like to remind the commenting fraternity here that there were many many more greedy members of the board who were simply not very nice people, and should share the attention.
Yes, while taking a massive reverse premium when most of the Magic / Silver circle / Big 4 accountants had a recruitment freeze in anticipation of a recession should be frowned up - pushing in front of your hard working secretaries at the coffee machine without even a "hello" is down right scummy!
Furthermore, despite a thinking they had a rosy future ahead the dastardly villains from downtown Spinningfields seemed to be prudent enough to mug-off newly qualified trainees with appalling salaries struggling pay mortgages.
Looking forward to next weeks episode of "It wasn't my fault either..."
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Anonymous | 3-Aug-2010 2:05 pm
Austin did not give his life give his life for that practice, he bled the firm dry but his individualistic, self-serving and reckless policies.
I am beyond appalled that another firm would make him head of a department, let alone hire him after he was responsible for the death of Halliwells.
It just goes to show that the people at the top always come out of things unscathed while everyone else suffers both financially and emotionally.
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Fellow professional | 3-Aug-2010 3:07 pm
Reading Mr Austin's "last stand speech" potrays himself as a victim of the crime.
Mr Austin, Mr Goodwin et al should be applauded for their audacity. Granted the other senior partners and management team should face the anger and despise of the professional public, but that will never happen.
I am surprised though that the SRA or whichever organisation who is in charge of corporate governance in the legal field has not taken action against Mr Austin and his cronies for severe mismanagement. If they were directors/MPs/public figures they would have been "made to repent".
Another question to the readers:
"Please could you explain to me why SRA have not opened an enquiry into this horrendous affair?" Surely it would be in their interest that an investigation was undertaken so that the profession as a hold can learn from this sorry episode in the life of legal practices.
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Ex Halliwells Trainee | 3-Aug-2010 3:10 pm
Shame on on you Ian. You'll take this disaster to your grave. The biggest law firm in UK history to go under thanks to greedy partners.
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Anonymous | 3-Aug-2010 3:27 pm
I just hope Ian Austin is more effective in defending his clients than he is at defending himself because that is the most pitiful explanation I have heard in a long time.
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Anonymous | 3-Aug-2010 3:40 pm
Someone once asked me who Harry Wells was
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Anonymous | 3-Aug-2010 4:31 pm
I worked at "Happiwells" for many years and at the time had a great deal of respect for Ian. Any respect has long since diminished with recent events, but as mentioned let's not forget many (but not all) of the equity partners were involved in these bad decisions; greedy, rude and dreadful businessmen and just because Ian is the only one naive enough to raise his head above the parapet doesn't mean he's solely to blame.
Where's Alec Craig...?
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Anonymous | 3-Aug-2010 4:39 pm
I agree and remember Ian from before the days of management. Can The Lawyer not manage to winkle Alec Craig from between the rocks?
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GRACE | 3-Aug-2010 6:00 pm
As I have stated previously you could not depart with a semblance of grace and keep a low profile.
As for puttng your all into the firm, you were still trying to take out of the firm on your last day. Recall trying to get car cleaned on your final day. IT equipment!
You and others in the firm should be ashamed of yourselves.
There were a number of loyal staff at Halliwells who are now in limbo. If shafting people was an Olympic sport, you would score gold.
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Marshall Hall KC | 3-Aug-2010 7:35 pm
Mr Austin lists Debt Advice as one of his specialities on the Law Soc website - http://www.lawsociety.org.uk/choosingandusing/findasolicitor/view=solicitordetails.law?id=134599&orgid=402773&SURNAME=austin&FORENAMES=ian&FIRMNAME=&POSTCODE=&searchType=S
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Anon | 3-Aug-2010 7:51 pm
"I've lost everything".
Well, no you haven't.
Or, at least, you hadn't until you chose to give this pathetic "poor me" interview to The Lawyer.
Until you did that, you could at least have retained your dignity.
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Anonymous | 3-Aug-2010 8:06 pm
Rumour has it that Alec Craig is presently hiding underneath the Bentley that he purchased after he trousered the Spiningfields reverse premium.
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Anonymous | 3-Aug-2010 8:16 pm
I would just like to add thank you for making my life and that of my colleagues' total hell over the last few months. We have now been sold to the highest bidder and been left without lifts, air con and even the small courtesy of a hoover over the last few weeks. The 4th and 5th floors now resemble Gollum's cave. I hope Heatons see you for what you really are - a huge bag of North West wind without even the guts to apologise properly. Good luck rattling around that pink house solo ...
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Anonymous | 3-Aug-2010 9:17 pm
Strikingly similar to some of the behaviour of partners who have runined DLA in the Middle East and then run off to leave others to deal with their carnage.
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