Counsel count cost of Halliwells collapse

first_imgThe protracted demise of Halliwells was set to enter its final chapter on Tuesday as administrators awaited creditor approval for proposals that would see the defunct firm formally wound up. As the Gazette went to press, it remained unclear how much secured creditor Royal Bank of Scotland would recoup in respect of outstanding loans to Halliwells totalling £17.7m. A report published last week by joint administrators from BDO said taxpayer-controlled RBS was not expected to receive the full amount. The report revealed that Halliwells collapsed owing £14.1m to unsecured creditors, including £2.1m owed to barristers and professional experts, including firms of solicitors. Seven QCs are among more than 20 counsel owed five-figure sums. HM Revenue & Customs is owed £4.3m, the highest amount. However, the list includes a wine supplier, a London sandwich bar, and Manchester United and Sheffield United football clubs, among dozens of trading entities both large and small. Unsecured creditors are not expected to receive a dividend but some fortunate barristers could recoup some or all of the amounts owed to them depending on when payments were processed. Manchester-headquartered Halliwells, one of the UK’s biggest regional law firms, collapsed earlier this year following a steep decline in profitability resulting from the recession. Net profit peaked at £8.5m in 2006/07 before the downturn took hold. The firm recorded a loss of £1.8m in 2008/09. It was the policy of the de facto partners, members of a limited liability partnership, to draw remuneration equivalent to the entirety of projected profits, the administrators noted. As they were LLP members, they are not personally liable for the firm’s outstanding debts. BDO has also drawn attention to the legacy of a multi-million-pound reverse premium paid to Halliwells a few years ago when it agreed to move into headquarters in Spinningfields, dubbed Manchester’s ‘Canary Wharf.’ About 75% of that premium, understood to exceed £20m, was distributed to equity partners, most of whom are understood to have left the firm before it fell into administration. The firm was subsequently run on borrowed money, with RBS taking a security over its assets. Halliwells LLP went under with work in progress of £16.3m and debtors totalling £12.1m. The bulk of the firm was carved up by four rivals – Hill Dickinson, Kennedys, Barlow Lyde & Gilbert and HBJ Gateley Wareing – to which most LLP members and staff transferred. The quartet are expected to pay more than £8m in total for the assets they acquired, partly depending on the extent to which outstanding client bills are honoured. The report shows that the administration has so far cost £1.1m, with BDO partners billing at up to £645 an hour, and principals and directors at the accountancy firm at £400-£500 an hour.last_img read more

Failing to investigate complaints can cost thousands

first_img Service improvements When it does not add up High cost of administration Mr A’s Dad died. He and his brothers then sold their father’s property. They asked a solicitor to help them set out their interests and those of their mother in the property – this was done in a statement of account. After some time, Mr A and his brothers realised that it was incorrect. The reason they found out was that the consequence of this error was that they had underpaid their capital gains tax and incurred penalties and interest from HMRC. Mr A wrote to the firm on several occasions to complain about what had happened. His correspondence went ignored. Mr A and his brothers were needing to spend a lot of time and effort trying to sort the tax issue out – and the final tax position of one of the brothers was still not finalised. It would have helped to have been able to talk to the solicitor to get an exact handle on what had (or had not) been done. To try and sort out this issue once and for all, Mr A instructed a new solicitor, who made a complaint to the firm on his behalf. They received a brief acknowledgement of the complaint and a note stating that the matter had been referred to the first firm’s insurers. Both Mr A and the second firm sent more letters asking for more information, but did not get a response. Not knowing what to do next, Mr A made a complaint to the Legal Ombudsman. After our investigation, which the firm was involved in, we found that there had been poor service. The firm agreed that it did not respond to the complaint and this was because of human error – its systems just hadn’t worked. The firm agreed to send out a comprehensive reply to Mr A as a resolution of this complaint and to chase its insurers. Both parties were informed that a new complaint could be made if Mr A felt his original issue had not been addressed in the letter sent by the firm. To date, we have not heard from Mr A regarding this issue, as the firm was now working to resolve the outstanding issues. Mrs H employed a solicitor to sell her property in July. In October 2010, she complained to her solicitor after her bank had contacted her to advise that the mortgage on the sold property had not been redeemed. Mrs H complained to the firm because it had failed to redeem the mortgage and she felt that it had not finished the work she had paid it to do. The firm was slow to respond to her complaint. She told us that she was also unhappy that the solicitors did not appear to have a proper complaints procedure in place. As she was having no joy with the firm, Mrs H decided to complain to the Legal Ombudsman. Following our investigation, the firm admitted that Mrs H’s complaint had not been forwarded to its complaints-handling partner owing to an administrative error. But it did tell us that it was keen to resolve all of her issues. To try and put things right, the firm offered Mrs H £250 in recognition of the distress and inconvenience its mistakes had caused her, as well as a refund of £450 for fees she had already paid. Mrs H was pleased with this offer and accepted it. Mrs G was buying a new house. Three years ago, she employed a solicitor to carry out the conveyancing on her new home. Part of what she wanted them to do was to register the property under her name. Time passed. Mrs G was living happily in her new home. Then Mrs G received a letter from HM Revenue & Customs (HMRC) which said that she owed over £29,000 in outstanding stamp duty. Mrs G looked into this and discovered that her property had not been registered properly. Mrs G contacted the firm to find out why her property had not been registered. She told us that she tried many times but no one in the firm gave her a satisfactory answer. In addition, the firm could not provide her with proof that it had attempted to register the property. Mrs G then made a formal complaint to the firm. She did not hear anything from it. Distressed and upset at the large bill from HMRC, Mrs G contacted LeO with her complaint. We looked into what had happened – it turned out that Mrs G’s solicitor had sent a cheque to HMRC and this had been cashed. But the property had not been correctly registered to Mrs G, so HMRC records were showing that there was money owing. What was most puzzling was that, given the mistake was within HMRC, why the firm had not looked into this and explained it earlier, especially when it had the chance using its in-house complaints procedure. As a result of our involvement, the firm agreed to correctly register the property and pay any outstanding stamp duty. It also offered Mrs G £1,000 as a goodwill gesture given how upset she was because of this mistake. Mrs G told us that she was happy with this outcome.center_img Our business is complaints. Yet I suspect that I was not the only one who spent a fair amount of time poring over the picture revealed by the Legal Services Board’s research into the way lawyers deal with complaints. To be sure, there are areas where the methodology has some quirks (it is ­difficult to understand how respondents were meant to express a view about the work of the Legal Ombudsman prior to our actual opening). But to dismiss the general finding that the customer experience of complaining about their legal service is still very patchy, as I have heard some do, is to ignore the truth. I am probably in a better position to know this than most. With up to 100,000 complainants contacting us a year, we get a pretty good picture of what is going on in the legal world. Admittedly, we only see a small sample of users of legal services and, by definition, the ones we do see are unhappy. But every one we do see has already – or all too often should have already – engaged with the firm’s complaints process. And, with some honourable exceptions, most of those calls we receive ­represent an expression of failure. Perhaps some of this failure is inevitable. For people offering a service which their customers do not properly understand in an area where there can be no certainties of outcome, complaints will always be a fact of life. No matter what a lawyer tries to do to explain to some clients why things happen as they do, there will be some who will simply be unwilling, or unable, to accept it. However, if complaints are inevitable, complaints-handling failures are not. Each of the 40,000 or so people who come to us each year to raise a complaint, but who have not yet complained to their lawyers, represents a complaints-handling failure. These are solicitors’ customers and firms are under an obligation to explain to them how to complain if they are not satisfied with the service provided. That is not simply a matter of including a passive sentence at the bottom of a five-page client engagement letter. As the Legal Services Board research illustrated, there are many consumers who will be so in awe of solicitors that they will take some convincing that you are serious about wanting them to raise any issues they have with the service you have given them. But I am not really that exercised about the number of complainants we have to send back to solicitors to make their complaints (usually accompanied by a quick email to the firm from the ombudsman alerting them that a complaint is on the way). All professions face the same issue. And an ombudsman spends most of their time redirecting complainants back to their service provider. The cases that worry me are where complainants have already raised their complaints with firms but where LeO investigations reveal clear evidence of poor service. I would like to give some examples. A taxing situation Mr X went to court for a family law matter. After the final outcome of his case, Mr H did not feel that his case had been conducted very well so he made a formal complaint both to his solicitor and barrister. After a couple of months, Mr X had not had a response to his complaint, despite pursuing the matter over the telephone. He had been promised a response, but was advised that there was an administrative delay; Mr X was frustrated with this reply. Mr X complained to the Legal Ombudsman about the way his lawyers had conducted his case and the fact that his complaint had gone unanswered. When we looked into this complaint, we decided that the issue was not the way in which the cases had been conducted; rather, there was a service issue concerning the way Mr X’s formal complaint was handled. After speaking with the firm, it admitted that it had delayed in responding to Mr X’s complaint and agreed that it would provide a proper, substantive response as well as sending a formal apology. The firm also provided us with evidence that our investigation had led to it amending and improving its internal complaints procedure to prevent future failures of this nature. While Mr X was not happy that we could not look at his other complaints, he was advised that he could seek independent legal action if he so wished. Mr X told us that he was happy that the issue surrounding his other complaint had been dealt with and he no longer wished to pursue this any further. What these cases illustrate is the sheer cost to firms of failures in their complaints-handling systems. Forget the value of the remedies which they had to pay as the result of our intervention or the embarrassment of being criticised by us. The cost of the billable hours wasted in having to respond to our enquiries and comment on our reports alone probably exceeded the profit on the transactions that gave rise to the initial ­complaints. A slicker, more reliable complaints-handling process in the first place would have saved these firms thousands. There is a degree of self-interest in this. One of the things that I have made a priority is to try to run an efficient, streamlined and high-value operation. In these days of austerity, with the profession facing cuts in legal aid and competition from new corporate entrants into the legal market, the last thing you want to pay for is an expensive and inefficient second-tier complaints-handling operation. So we have a choice. I can run an organisation that spends its time settling tens of thousands of simple complaints, which could easily have been resolved at a local level, all at the expense of the profession. Or, I could run a smaller, faster and cheaper operation which spends its time reviewing complaints files assembled at the local level and arbitrating on the most difficult, complex or intractable cases. I know which one I’d prefer. A monthly column featuring practical advice and anonymised case ­studies from chief ombudsman Adam Sampson and his teamlast_img read more

The judiciary – still too pale, male and stale?

first_imgThere was a time, in those unreconstructed days before the Judicial Appointments Commission (JAC), when a woman would be turned down for judicial appointment simply because her skirt was deemed too short. Or she looked bookish or spinsterish or headmistressy. Or wore too much make-up. Yes, those were the days, not so long ago, when being pale, male and stale was a positive advantage when trying to get your rump on the bench. That’s a white-skinned man who’s past his best-buy date for those of you who don’t like rhymes. It also helped if you had been to public school and then Oxbridge, spoke posh, played golf, belonged to the right clubs and had the letters QC after your moniker. You needed to be ‘straight’, too, of course, as well as pale, male and stale. After all, it would be entirely inappropriate to have gay men disporting themselves in a judge’s sober ermine and silk. Thankfully, that’s all behind us now and the JAC is busily creating a diverse judiciary that reflects the make up of the country upon which it sits in judgment. Or is it? Some 70% of lesbian, gay, bisexual and transgender (LGBT) lawyers believe that the judicial selection process still discriminates against them. And the same proportion says they would be likely to apply for a judicial role themselves if there were more existing judges as role models who were openly gay. This all comes from a report prepared by LGBT network the InterLaw Diversity Forum based on a survey of more than 150 practising LGBT lawyers. Some 85-90% of respondents said that the creation of the JAC was a ‘positive development’ towards countering perceived prejudice in the selection process. But there is a still a long way to go, although the JAC is now monitoring the sexual orientation of applicants to ensure that the judiciary reflects and serves the whole of society. InterLaw founder Daniel Winterfeldt, partner at City firm CMS Cameron McKenna, said: ‘It is vital that the judiciary is seen to reflect the society it serves because confidence in the judiciary is so central to the functioning of a fair society.’ The diversity of the judiciary is clearly a hot topic at the moment because no less august a body than the House of Lords is also getting in on the act. Last week saw the first evidence session of a House of Lords constitution committee inquiry into the fairness and effectiveness of the present judicial appointments system. Cheryl Thomas, professor of judicial studies at University College London, told the committee that political leadership was required to achieve diversity. That’s an audacious statement in a country where the independence of the judiciary is the jewel in the crown of our legal system! ‘President Clinton said that he wanted a judiciary that looked like America and that is what began to happen,’ Thomas said. ‘If we want diversity, we need political leadership.’ The argument convinced me. Professor Alan Paterson, director of the University of Strathclyde’s centre for professional legal studies, also supported political involvement, saying that it was not feasible to expect the present JAC to ‘break the log jam’ and make the judiciary genuinely diverse. He said: ‘This is only possible for politicians. ‘The appointments system was transformed in Canada because politicians said they wanted to see women and people from ethnic minorities who can do the job on every shortlist.’ Dr Erika Rackley, Durham University senior lecturer in law, said that there was no tension between merit and diversity if it was accepted that a diverse judiciary did a better job than a non-diverse one.’ The inquiry is expected to continue until the end of the year. So there you have it – progress on all fronts, albeit slow. Let me close with perhaps my favourite – if that’s the right word – anecdote about discrimination against women applying for the judiciary before the JAC came into existence. Praise was heaped upon a male barrister for arguing with ‘passionate conviction’ in court. A woman barrister, in contrast, was criticised for lacking emotional detachment. She was turned down for the judiciary: far too hysterical to become one of us, don’t you know, old boy….last_img read more

Play it again Sam

first_imgPutting the legal ombudsman and solicitors in the same room is like inviting Theresa May and Ken Clarke to a cat show. But the two factions got on remarkably well at a Law Society event last week – with chief ombudsman Adam Sampson (pictured) even extracting the odd laugh from his sceptical audience. Apologising for arriving late at the hotel venue, he informed the audience with a knowing glare: ‘I made a mistake; it’s always best to admit mistakes.’ He told another tale of when, on switchboard duty, he picked up the phone to a solicitor anxiously demanding: ‘I want to sort this out so the ombudsman never hears about this,’ only to be told: ‘You’re speaking to him.’ But meetings with solicitors don’t always end well. Sampson admitted he is used to the same parting shot: ‘It’s been lovely to meet you – I just hope we never meet again.’last_img read more

We have the power

first_imgSunil Kambli is absolutely correct. All the Law Society, with the agreement of the master of the rolls, has to do is to require borrower and lender to seek separate representation and the problem of restricted lenders’ panels will be overcome at a stroke. Let them have their panel of 43: it won’t matter. It will involve some rise in the cost of domestic conveyancing, but that cost is unreasonably low now and has not kept pace with: house price inflation; the cost of running a responsibly conducted legal practice; or the costs reasonably charged in other areas of legal work. When costs are too low, work is sometimes done shoddily, and our premiums rise. Everyone knows this. None of this cheapskate work is in the national interest, no matter how much the ‘poundstretcher’ British may be mistakenly obsessed with value for money. Essentially, the public has had conveyancing at a discount for years, with utterly predictable results. From time to time it has received what it had paid for and that all has to stop. Obvious advantages of the new rule will be that there will be twice the opportunity for something missed to be spotted in time. We are only human and things sometimes escape us. There is too much money involved in domestic conveyancing for mistakes to slip by unnoticed. Also, the possibility of a conflict of interest arising will necessarily disappear. It will need to be said that any solicitor, notary or conveyancer acting in a transaction will not be discharging their duty of care to the lender just by sending out a checklist with boxes to tick, culminating in a certificate of title from the person acting for the borrower, which allows the lender’s solicitor to avoid investigating the title by relying on that certificate instead. There has been too much of that recently; so, when a solicitor acts for a lender, all the proper work must be done and the certificate on title to the lender must come from its own legal advisers in reliance principally on its own research, including correspondence with the borrower’s solicitors. Therefore, I demand that a practice rule be made as soon as possible to prevent any legal practice acting for both borrower and lender in the one transaction. Exactly the same rule needs to be put in place simultaneously by the Notaries Society and the Council for Licensed Conveyancers. What are we waiting for? Do we want to stay in practice or not? It will save a lot of agonising meetings with lenders like HSBC, fighting a rearguard action. Actually, the threat of bringing in such a rule would give the Law Society negotiators rather more clout when knocking on HSBC’s door, if anyone still wants to keep knocking. Anyway, we have the solution within our power, so let’s do it and be less timid. The lenders are not timid: they just do what they like. Michael Brough, Michael Brough and Cohen, Beaconsfield, Buckslast_img read more

Almost famous

first_imgSubscribe now for unlimited access To continue enjoying Building.co.uk, sign up for free guest accessExisting subscriber? LOGIN Stay at the forefront of thought leadership with news and analysis from award-winning journalists. Enjoy company features, CEO interviews, architectural reviews, technical project know-how and the latest innovations.Limited access to building.co.ukBreaking industry news as it happensBreaking, daily and weekly e-newsletters Subscribe to Building today and you will benefit from:Unlimited access to all stories including expert analysis and comment from industry leadersOur league tables, cost models and economics dataOur online archive of over 10,000 articlesBuilding magazine digital editionsBuilding magazine print editionsPrinted/digital supplementsSubscribe now for unlimited access.View our subscription options and join our community Get your free guest access  SIGN UP TODAYlast_img read more

Mobilise!

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The RIBA bites back

first_imgTo continue enjoying Building.co.uk, sign up for free guest accessExisting subscriber? LOGIN Stay at the forefront of thought leadership with news and analysis from award-winning journalists. Enjoy company features, CEO interviews, architectural reviews, technical project know-how and the latest innovations.Limited access to building.co.ukBreaking industry news as it happensBreaking, daily and weekly e-newsletters Get your free guest access  SIGN UP TODAY Subscribe to Building today and you will benefit from:Unlimited access to all stories including expert analysis and comment from industry leadersOur league tables, cost models and economics dataOur online archive of over 10,000 articlesBuilding magazine digital editionsBuilding magazine print editionsPrinted/digital supplementsSubscribe now for unlimited access.View our subscription options and join our community Subscribe now for unlimited accesslast_img read more

Building buys a pint … for rightmove.co.uk

first_imgGet your free guest access  SIGN UP TODAY Subscribe now for unlimited access Subscribe to Building today and you will benefit from:Unlimited access to all stories including expert analysis and comment from industry leadersOur league tables, cost models and economics dataOur online archive of over 10,000 articlesBuilding magazine digital editionsBuilding magazine print editionsPrinted/digital supplementsSubscribe now for unlimited access.View our subscription options and join our community To continue enjoying Building.co.uk, sign up for free guest accessExisting subscriber? LOGIN Stay at the forefront of thought leadership with news and analysis from award-winning journalists. Enjoy company features, CEO interviews, architectural reviews, technical project know-how and the latest innovations.Limited access to building.co.ukBreaking industry news as it happensBreaking, daily and weekly e-newsletterslast_img read more

Short and Tweet

first_imgGet your free guest access  SIGN UP TODAY Subscribe now for unlimited access Subscribe to Building today and you will benefit from:Unlimited access to all stories including expert analysis and comment from industry leadersOur league tables, cost models and economics dataOur online archive of over 10,000 articlesBuilding magazine digital editionsBuilding magazine print editionsPrinted/digital supplementsSubscribe now for unlimited access.View our subscription options and join our community To continue enjoying Building.co.uk, sign up for free guest accessExisting subscriber? LOGIN Stay at the forefront of thought leadership with news and analysis from award-winning journalists. Enjoy company features, CEO interviews, architectural reviews, technical project know-how and the latest innovations.Limited access to building.co.ukBreaking industry news as it happensBreaking, daily and weekly e-newsletterslast_img read more