A landmark ruling obtained by Kroll and DLA Piper in the Allders case wasn’t quite so original as it first seemed.
DLA applied to the High Court in early February for a ruling that redundancy costs were not payable out of administration expenses.
If, as the Insolvency Service claimed, they were payable out of administration expenses, there would have been no money left to pay the fees of lawyers and administrators – a drastic result for all concerned.
However, it has emerged that just a few days before DLA made the application, a rival insolvency team at Lawrence Graham had a meeting with three officials from the Insolvency Service, including the director general Desmond Flynn, to discuss that very issue.
The officials told Lawrence Graham in no uncertain terms that they believed redundancy fees were an administration cost and ranked above professional fees.
The edgy relationship between claims management companies and solicitors has always been a controversial topic. Last Tuesday’s (22 March) announcement by the Lord Chancellor that the former are now to be regulated was widely applauded.
The same day saw a debate in Westminster Hall initiated by the Labour MP for North Durham, Kevan Jones. It exposed cases where solicitors are implicated in charging claimants unnecessary costs. Jones referred to a recent Law Society decision against Liverpool firm Silverbeck Rymer, saying it had charged a client costs despite knowing they would be covered by a compensation scheme for ex-miners.
John Mann, the MP for Bassetlaw in Nottinghamshire, said he had referred a number of firms – the largest being Newcastle’s Watson Burton – to the Law Society for allegedly negligent advice given to clients. “These aren’t tinpot, diddly-squat organisations,” said Mann, “but big, rich, wealthy solicitors, who are bringing down the good name of solicitors across Britain.”
(Watson Burton did not return calls for comment, but Silverbeck Rymer said it was disappointed with the Law Society finding and was seeking a review.)
Responding to Jones, Mann and other speakers, David Lammy, the Minister for Constitutional Affairs, promised change. The question is: how quickly can that change come?
Lovells’ yearning for yen
Following Lovells’ shock decision to axe 25 partners in a bid to bolster flagging profitability, the focus has now shifted to the firm’s Tokyo office.
In January Lovells launched a strategic review of what is now a two-partner operation. Part way through the review, it appears that the office, which saw one partner leave after the recent cull, has escaped the axe. Well, at least for the moment, as according to one senior Lovells partner, closure is currently not on the agenda.
This is a little surprising, since it is believed that Tokyo has never made a profit; but it might have something to do with a need to save face in the city. After all, the firm invested in new, larger premises in Tokyo only last July.