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 | 9-Sep-2010 10:13 am
I thought I saw Ian Austin in a restaurant, so made a point of talking to whoever would listen very loudly about the Halliwells collapse.
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Lady in House | 9-Sep-2010 2:48 pm
How we all laughed when we read this....not. Why not take your medicine like a man Mr Austin instead of a self-serving spineless little bully boy. You took the gain, as they say, now take the pain. Are we really meant to feel anything other than contempt from a man that lacked so in the cojones department when push really came to shove? Why cant he spout his drivel elsewhere? Please dont give him any more column inches - he's had far too many over the years for his own good. Do you think his ego will be dented by what's happened? not a bit, all this is saying is "nowt to do with me, chief".
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Poly | 9-Sep-2010 4:36 pm
He ought to be less arrogant now the landlord of st James court has demanded 3.5m in rent. Lol not so cocky now eh big man?
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Guarantee the rent | 9-Sep-2010 4:42 pm
Austin and 4 others gave personal guarantees on the old premises. He is going to lose a lot more than 700k
My maths like his is really poor. What is 3.5m divided by 5?
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Anonymous | 9-Sep-2010 8:04 pm
Why were the Halliwells partners stuck with Brown Street ??
Because they had taken a reverse premium from the landlords .
One guess what they did with it.
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Anonymous | 9-Sep-2010 10:10 pm
What's the prospect of his being made bankrupt? I am not sure how the SRA view this, but it would mean the end for his time as a Trustee at Salford University.
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Anonymous | 10-Sep-2010 9:08 am
Not true re the g'tees. Alec C and 3 others (not Ian actually) are the named tenants at SJC because the lease dates back to pre LLP days and was never assigned to the LLP, presumably so it didn't show as a liability in the LLP accounts, it certainly wasn't an oversight. Makes the furore about 'assuming they would be released on leaving the LLP' all the more laughable, particularly as one of those who is objecting holds himself out as a property lawyer.
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Anonymous | 10-Sep-2010 10:23 am
So let us see what the maths actually looks like for some of the full members;
Ian has helpfully indicated that he put in £700k. We may therefore be able to assume his capital account stood at that figure as with others on presumed maximum points and including the various cash calls. For the guarantors of SJC there appears to be a quarter of £3.5m ie £875k. It is already clear from the reported actions of Paul Thomas that he at least is not convinced the other members will be rushing to pick up their share of that figure.
Can we also add claims for £20k by all the FSMs if there was any misprepresentation on the cash call and what about the tax?
Can we also add claims by the admiinistrator for return of any recent distributions including the reverse premium?
Were the full members taking out funds whilst the firm was trading at a loss and sinking under an ever increasing mountain of debt that it could not satisfy?
Questions questions.
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Anonymous | 10-Sep-2010 2:02 pm
And to the amounts above should be added those monies derived from activities associated with clients of Halliwells and personally pocketted by those at the top of the points. Non-executive fees, arrangement fees and investment returns many of which were not expressly sanctioned by , or indeed disclosed to , the partnership. Doing property or corporate transactions with Manc clients could be a little like tripping unawares through a minefield as one confronted the ordnance of undisclosed senior-partnerial interests. Halliwells was not like other large law firms in this regard and it is one area where this magazine's reporting has been deficient. Newcomers from large and small firm alike were constantly surprised by the lack of control over these "entrepreneurial" habits.
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Litigation | 10-Sep-2010 8:43 pm
It seems the partners all resigned from the llp on an hours notice leaving Paul Thomas and the other guarantors to take the pain. It seems the argument goes like this. If you are not a partner the guarantors can't seek a contribution. The guarantors ironically took the largest shares of the reverse premium so there is a bit of poetic justice to this. That having been said it displays the calibre of the people involved in this. Partnership and friendship means nothing to them. They ought to be ashamed of themselves but I doubt they have even given it a second thought.
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Anonymous | 11-Sep-2010 9:52 am
From my experience of the firm the principle of disclosing and accounting for secret profits obtained by partners was applied very differently according to who you were.
I do recall a number of partners having problems in this area which appeared to be remarkably similar to situations that did not attract censure for certain others. It appeared to me that this was used as a tool to get rid of certain partners if their face had ceased to fit.
This does however support what is suggested above as by doing this there is evidence of the principle being accepted by the management who will pesumably now need to explain why their situation was different if they are to defend a claim from the administrator.
Perhaps we areall wrong about this and the relevant individuals will very shortly be stumping up large sums for the benefit of RBS, FSMs and others.
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Anonymous | 12-Sep-2010 11:39 am
It shouldn't be forgotten that not every partner at Halliwells can be tarred with the same brush and it was a minority who created this situation. The Liverpool office succesfully managed to protect the majority of its staff including the future trainees. All of those parties are extremely grateful to the people from the Halliwells Liverpool office for their help and support as well as all those involved at Hill Dickinson.
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24/7 | 13-Sep-2010 6:44 pm
When did the marketing firm 24/7 owned by Austin, Craig, Hills et al cease to receive payment for its services?
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Intersted | 13-Sep-2010 7:31 pm
any more news from Salford? Does Austin still loom large over the finances of the university or has he fallen on his sword?
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Anonymous | 14-Sep-2010 9:20 am
Unfortunately Austin is still looming large at Salford, and the University are refusing to clarify whether or not they will be considering his position:
http://www.whatdotheyknow.com/request/halliwells_llpchair_of_audit_com#outgoing-78739
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Jack Bauer | 14-Sep-2010 9:32 am
Re 24/7
An equally interesting question would be how much 24/7 was being paid for its services, and how much profit went to its owners as opposed to the people who worked for it.
Does anyone know the correct name or company number for it, as there are a lot of 24/7 names at companies house. A look at the last few years' accounts might be interesting.
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Anonymous | 14-Sep-2010 11:46 am
24/7 Comms Ltd is a company registered in England and Wales with number 5079956.
www.247comms.co.uk
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Anonymous | 14-Sep-2010 12:13 pm
Is he administrator reading these exchanges and taking note? If not perhaps it would be sensible to make sure he knows to check the relationship with any provider of goods or services to the LLP.
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Anonymous | 14-Sep-2010 12:32 pm
I'm too cheap to pay to access those accounts - anybody care to communicate the jist of what secrets they spill (if any)?
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Anonymous | 14-Sep-2010 4:01 pm
Funnily enough, and as previously disclosed by ROF, the shareholders of 24/7 were (at the relevant times) all equity partners (or former equity partners) and the former FD of Halliwells LLP.
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