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Halliwells Intenational Law Firm

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Debt ridden Halliwells law firm looks like its going down and taking some big thrashing partners with it. And people always say you should trust the big operators at times like these...

http://www.legalweek.com/legal-week/news/1720050/halliwells-partners-gbp10m-joint-liability-banks-deal-sell-business-falls

Spectre of administration raises possibility that partners could be liable for millions in capital contributions

Existing and former Halliwells partners may find themselves jointly liable for around £10m owed to the national firm's banks as it moves to thrash out a deal to transfer the business.

Halliwells' banks collectively lent partners around £10m to fund capital contributions, which the law firm confirmed it is unable to pay back. Usually a law firm undertakes to pay the loan - which is taken out by partners and put into the firm on entering the equity - back to the bank on the partner's departure. However, lenders could now turn to individual partners to recover what they are owed.

In addition to initial capital loaned by Royal Bank of Scotland (RBS) to partners on entering the equity, a number of partners could find themselves liable for loans taken out for a 2008 capital injection. Equity partners were asked to double their capital in the firm, borrowing the money from Swedish bank Handelsbanken. At the same time, fixed-share partners were asked to contribute between £10,000 and £20,000 each.

This means in total some partners could be liable to pay back loans of hundreds of thousands of pounds.

A number of ex-partners have expressed concern that they will potentially be left bankrupt if the banks seek to recover the money. If this is the case, many will not be able to remain in their new firms' partnership as UK laws and the majority of partnership deeds require automatic expulsion of personally insolvent partners.

Halliwells, which filed a notice of intention to appoint an administrator last Thursday (24 June), is currently in discussions with a number of firms to sell off all or part of the business. It is understood that RBS hopes to secure around £12m from the sale of the firm. Halliwells' corporate debt with RBS currently stands at £17.7m.

Hill Dickinson, which is in detailed discussions to take over the majority of Halliwells' business and is the only firm to set out a formal offer so far, has offered to repay the bank a portion of the capital owed as part of the deal.

If Halliwells and Hill Dickinson cannot come to an arrangement it is likely that Halliwells will look to sell off parts of the business to a number of firms. Barlow Lyde & Gilbert (BLG) is understood to have expressed an interest in taking on Halliwells' 100-strong insurance team for £5m.

The firm is hoping to agree a sale without having to enter into a long process of administration, working with accountants BDO Stoy Hayward to consider its options. Currently there is a moratorium on Halliwells' liabilities, and the firm has up to 10 working days from the point of filing notice to find a buyer. However, the firm could extend this deadline by filing rolling notices.

Halliwells said in a statement: "Halliwells LLP is in advanced discussions for the transfer of the business to another highly-regarded firm of solicitors due to events that have adversely impacted the finances of the firm. The underlying business remains strong and has attracted interest from a number of parties."

Hill Dickinson and BLG declined to comment.

Separately, it has emerged that Halliwells laid off its seven-lawyer London real estate team at the end of May, including two partners.

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You'd think a lawyer would know the legal consequences of being a partner, rather than, say, a director in a limited company.

Still, perhaps they did. Perhaps they just weren't very good at sums and didn't think the firm could ever go bust.

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And I note at the end of the article it says:

Separately, it has emerged that Halliwells laid off its seven-lawyer London real estate team at the end of May, including two partners

:rolleyes:

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You'd think a lawyer would know the legal consequences of being a partner, rather than, say, a director in a limited company.

Still, perhaps they did. Perhaps they just weren't very good at sums and didn't think the firm could ever go bust.

These guys call themselves "Rainmakers".

Too big to fail logic turned them into sh*t storms.

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Daft as a brush property deals.

Some reports say Halliwells partners pocketed a fat kickback from the Spinningfields Mcr HQ property deal a while ago. Where has that money gone? If no one steps in to rescue them out, and the partners have accepted unlimited liability without adequate indemnities, let the banks take what they are owed including their homes in Hale. The area where house prices can never crash.

  • The firm is paying a rent of £26 per sq ft – meaning an annual rent bill of £4.68m. It has been facing the prospect of rents rising even further because of a clause in the lease dictating upward-only rent reviews.
  • Peter Gallagher, director at P3 Property Consultants and one of the city's most respected commercial property brokers, has spoken out and blamed the way developers and their tenants have worked in the city over the last 20 years. For two decades, large new office developments in the city have been funded by tenants agreeing to allow high rents on their leases, knowing this will appeal to the investors who will eventually buy the building. In return, the developer gives the occupier a cash handout upfront, in the expectation of selling the building for more than it would otherwise have been worth.
  • "The tactic of swapping rent for capital was all part of the mentality that means everyone assumes booms go on forever. "Inevitably, today, this means there will have to be a completely new way to deliver big new office buildings in Manchester, and this will have to start with a more rational approach to land prices in the city. What we have to see is more rational valuations than we've seen over the last five years of the boom."

Manchester Evening News

City centre rents cause financial woes

July 01, 2010

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Guest sillybear2
Guest sillybear2

Is this true? You would have thought that with unlimited liability, people would be a bit more careful when borrowing money.

Debt is wealth, innit. No more boom and bust <_<

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Is this true? You would have thought that with unlimited liability, people would be a bit more careful when borrowing money.

They're lawyers.

Like bankers, they're a protected 'profession' given licence to permanently cream off the top via non-jobs.

This is the entire basis of our economy - theft.

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This is how things should work, none of the limited liability crap. I wonder, though, if there are insurance policies covering the liabilities.

Still - you have to be particularly reckless to run a law firm into the ground. What the hell were they doing?

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<br />These guys call themselves "Rainmakers". <br />Too big to fail logic turned them into sh*t storms.<br />
<br /><br /><br />

More like 'cowboys' than indians!

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Daft as a brush property deals.

Some reports say Halliwells partners pocketed a fat kickback from the Spinningfields Mcr HQ property deal a while ago. Where has that money gone? If no one steps in to rescue them out, and the partners have accepted unlimited liability without adequate indemnities, let the banks take what they are owed including their homes in Hale. The area where house prices can never crash.

There's another report here to that effect.

The firm, which posted record profits and turnover during the bull market, ran into difficulties when it took on new Manchester headquarters at Spinningfields in central Manchester in 2007, paying top-of-market rent believed to be £35 per sq ft. It subsequently ­distributed a property-related windfall to partners as opposed to investing it in the business.

http://www.thelawyer.com/halliwells%E2%80%99-assets-up-for-grabs-as-firm-files-to-go-into-administration/1004848.article

Their offices in the Spinningfields development were a complete ego trip. Interestingly another large tenant in Spinningfields is RBS.

Edited by legend

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This is how things should work, none of the limited liability crap. I wonder, though, if there are insurance policies covering the liabilities.

Still - you have to be particularly reckless to run a law firm into the ground. What the hell were they doing?

Not really, prime office space is a high fixed (and uncontrollable - with upwards only reviews) cost.

No limited liability protection = no firms taking on leases = no returns on pension funds or savings

How they ended up without LLP protection is pretty staggering though.

Edited by Soon Not a Chain Retailer

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Guest sillybear2

So another property speculating shell company dressed up as a going concern.

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The writing was on the wall for Halliwells over 12 months ago - it always leaves me speachless how finacially inept and niave some partners are in law firms. For guys who advise clients on risk aversion and assessments - they really should read their own small print.

I expect this will not be the last firm over the next 12 months - however a lot of other firms are posting big profits on the back of mass redundancies and partners culls ...

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The writing was on the wall for Halliwells over 12 months ago - it always leaves me speachless how finacially inept and niave some partners are in law firms. For guys who advise clients on risk aversion and assessments - they really should read their own small print.

I expect this will not be the last firm over the next 12 months - however a lot of other firms are posting big profits on the back of mass redundancies and partners culls ...

New partners are told to sign or not make partner. You CANNOT negotiate it. Trust me.

Halliwells is also just another LLP. The first L being rather important - the partners' exposure (other than personal security (I don't think Halliwells' partners have been required to do this, BTW)) is no different than that of a shareholder in a company (basically). The partners have basically put about £150K in and have been taking out about £260K a year for the last 10 years (based on average profits per equity partner). Cracking return on their money if you ask me.

It's also been well known for at least 10 years that Halliwells were having real issues with their financing....... they are not alone, believe me.

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New partners are told to sign or not make partner. You CANNOT negotiate it. Trust me.

Halliwells is also just another LLP. The first L being rather important - the partners' exposure (other than personal security (I don't think Halliwells' partners have been required to do this, BTW)) is no different than that of a shareholder in a company (basically). The partners have basically put about £150K in and have been taking out about £260K a year for the last 10 years (based on average profits per equity partner). Cracking return on their money if you ask me.

It's also been well known for at least 10 years that Halliwells were having real issues with their financing....... they are not alone, believe me.

I don`t doubt it - my point is that anybody with commericial acumen (which lawyers are expec ted to have) would have taken proper advice on the risks; partnership may be the top of the greasy pole, but those who go into blind need a wake up call or deserbe waht they get.

I am not sure about the personal security issue - but given that the bank wanted a heck of a lot of security for their exposure, I would be very surprised if there was not a guarantee in there somewhere. Perhaps I`m just being sceptical but i`ll watch this with interest

They won't be the last - and their failure will cause banks to tighten the screws on other firms ...

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Guest sillybear2

I don`t doubt it - my point is that anybody with commericial acumen (which lawyers are expec ted to have) would have taken proper advice on the risks; partnership may be the top of the greasy pole, but those who go into blind need a wake up call or deserbe waht they get.

I am not sure about the personal security issue - but given that the bank wanted a heck of a lot of security for their exposure, I would be very surprised if there was not a guarantee in there somewhere. Perhaps I`m just being sceptical but i`ll watch this with interest

They won't be the last - and their failure will cause banks to tighten the screws on other firms ...

Seems like they operate the 'premier league' model, what do they spend their money on? Salaries, bonuses, posh working environments and outrageous luncheon requirements? It's not like vast capital expenditures are needed, what's the mark up for printing bull$hit on pieces of paper and giving it undue value because you're a member of the right professional body (old boys club).

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New partners are told to sign or not make partner. You CANNOT negotiate it. Trust me.

Halliwells is also just another LLP. The first L being rather important - the partners' exposure (other than personal security (I don't think Halliwells' partners have been required to do this, BTW)) is no different than that of a shareholder in a company (basically). The partners have basically put about £150K in and have been taking out about £260K a year for the last 10 years (based on average profits per equity partner). Cracking return on their money if you ask me.

It's also been well known for at least 10 years that Halliwells were having real issues with their financing....... they are not alone, believe me.

Met a guy in the US a few years ago who was made a partner at Andersons weeks before the Enron thing blew up. He wasn't in the "bad" division, but he never saw a penny for his 500,000k partner loan.

That must have been a bitter pill.

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Guest sillybear2

Met a guy in the US a few years ago who was made a partner at Andersons weeks before the Enron thing blew up. He wasn't in the "bad" division, but he never saw a penny for his 500,000k partner loan.

That must have been a bitter pill.

Who audits the auditors? I don't think partnerships need to be, seriously.

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Perhaps this is not on a scale of Halliwells, and perhaps Cobbetts will live on, if their restructuring is successful.

Cobbetts: the path to administration

30 January 2013

Manchester firm Cobbetts has confirmed its intention to appoint administrators and is actively seeking a buyer for its business. Here we look back at the events that led the firm from a merger-hungry North West leader in 2004 to a firm on the verge of collapse in 2013.

http://www.thelawyer...1016731.article

http://www.legalweek...le-announcement

Eversheds are also making a few cutbacks, including job cuts and reorganising in Asia and closing the office in Copenhagen.

http://www.mancheste...-office-1241699

Edited by Venger

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And I noticed things aren't still fully wrapped up at Halliwells.

Looks like the banks are drooling for money back from some of the equity-partners. The ones who paid themselves profits after a bumper year, which I think was mostly boosted a lot by that property-deal they did on one of their main offices.

Among the key issues at stake are the return of a £20.4m windfall received by the firm’s equity partners following a reverse premium deal with the firm’s Manchester office landlord Allied London.

http://www.thelawyer.com/halliwells-mediation-put-on-hold-after-eight-months-of-deliberations/1015825.article

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Not sure about this, but I believe that an LLP must publish their accounts. I suspect that they went with a joint and severable form of partnership for privacy purposes. Maybe there are some skeletons in the closet?

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