Sometimes the job of a managing partner bears more than a passing resemblance to the role of Victor the Cleaner in Luc Besson’s French classic Nikita.
Some of us would pay good money to see Peter Crossley donning a plastic overcoat and dragging an acid bath into a Hammonds partners’ meeting to clean up the mess. Before Crossley can dissolve the dead bodies, though, he’s got to find them – and quickly.
While we presume there’s nothing actually under the patio in Devonshire Square, Crossley has already had to deal with some unpleasant quirks in Hammonds’ finances.
The bulk of a £3m ‘exceptional charge’ that will hit the partners this year is due to a £1.6m write-off of irrecoverable bills. The firm started work on a Customs case nearly three years ago, but because proper terms of engagement were never sorted out it has been unable to recover any fees.
The Customs write-off has perturbed many partners. Last year The Lawyer UK 100 Annual Report said the firm averaged a lock-up of 101 days – a perfectly respectable performance. So how on earth could irrecoverable fees from 2002 still be on a law firm’s balance sheet in 2005?
Since Crossley took office in September, he has moved decisively. According to a senior Hammonds source: “While he’s managing partner, the firm’s accounts will be totally run along prudent financial lines.”
Crossley’s decision to hire PricewaterhouseCoopers to replace the incumbent auditors, two-partner Bradford firm Fletcher Greenwood & Co, certainly sends the right signals.
Meanwhile, senior partner Richard Burns, who has been in the post for three years, has had to deal with a number of protests from partners. Last year (The Lawyer, 18 October, 2004) we reported that four Leeds partners confronted Burns over the firm’s performance, especially in London. Burns also faced tough questions at an equity partners’ meeting earlier this month.
There have been belated moves to shore up the capital structure. Hammonds had a capital call in late 2003, which saw partners stump up £12m in extra capital contributions. As at January this year, the firm’s overdraft stood at £31m.
But the capital structure is hardly helped by partner departures: 16 have quit since January 2004, and some of them were entitled to almost immediate repayment of their capital.
Crossley looks like being absolutely the right man for the clean-up job. And boy, it’s some job. If he pulls it off, he deserves all the plaudits going.