Mishcon equity partners left nonplussed as 1996 accounts fiasco remains unresolved

Mishcon de Reya has not fully signed off any of its accounts since 1996, leaving former and existing equity partners unsure about their account balance for that year.

Mishcon claims that it has not finalised the accounts because a financial dispute involving equity partners who left the firm in 1995 has not been resolved. Mishcon chief operating officer Bambos Giorgiou said that as the 1996 accounts had not been settled, the firm had not been able to finalise accounts for subsequent years.
Giorgiou stated that it is on this point only that the accounts have not been finalised. “All the information we have to provide to the Law Society and the Inland Revenue has been provided,” he stressed.
He also admitted that existing equity partners who were with the firm in 1996 are unsure of their financial status for that year. But, he says, this is because of a tax point arising from the retirement deed that the three partners signed when they left the firm.
“There are very complicated partnership agreements over how the tax bill is shared out between partners,” said Giorgiou. “The departed partners say that any tax agreements made before they signed their retirement deeds don't refer to them. We don't agree. We think that they left owing us large sums of money.”
One of the former equity partners, who does not wish to be named, insisted that he was owed significant monies for that year. However, he said he cannot know the amount without seeing the accounts and the underlying tax computations for that year. He claimed that although he was in the equity in 1996, Mishcon refused to show him the 1996 accounts.
Hempsons partnership disputes expert Lynne Abbess said that, whatever the problem, it was bad practice for law firms not to finalise their accounts.
“There's usually a process of signing off accounts in any partnership,” she explained. “It's good practice to sign them off as soon as is practicable after the year end, and it's certainly not good to leave them for five years.
“This is something that will cause repercussions throughout a partnership if it stays unresolved.”