Hammonds in all-out war over partner repayments

The row between former Hammonds partners and the firm has escalated, with legal action now imminent as the disagreement over repayment of drawings drags on.

A group of 14 former partners has formally instructed Addleshaw Goddard partnership expert Richard Linsell to advise them as negotiations with Hammonds have yielded little. A claim now looks increasingly likely.

Hammonds wrote to the ex-partners last week with a deadline of 30 April for repayment of overdrawings from 2004-05. The firm is asking partners for a total of £3m, drawn during the last financial year, in addition to repayments for the 2003-04 financial year.

Former partners had until last Friday (31 March) to agree to a five-year repayment plan for drawings from the 2003-04 year. At the time of going to press it was unclear whether or not this would be accepted by the group.

It is more than a year since the firm first announced it was bracing itself for a dramatic drop in profitability. The group of former partners had already instructed leading counsel (The Lawyer, 25 July 2005) after it emerged that current and former equity partners would have to repay thousands of pounds each in drawings.

Managing partner Peter Crossley said: "It's inappropriate for us to comment on the private and confidential matters of our partners and how they discharge their obligations, particularly those partners no longer at the firm.''
Hammonds is in the midst of a strategic review involving one-to-one consultation with all current partners. The firm is due to vote on the review's recommendations later this month.

However, the firm has now decided not to tie equity partners down for a further year's lock-in when the current 14-month agreement ends in June. Last week Crossley confirmed that "a further lock-in is not being proposed".

Addleshaws declined to comment, citing client confidentiality.