The management of one of Britain’s top regional law firms was holding crisis talks last night after calling in the administrators. Halliwells of Manchester is the first big legal practice to fall victim to the financial crisis and could become the biggest ever to go out of business.
The negotiations were aimed at transferring the firm’s lawyers and clients to Hill Dickinson, a Liverpool-based rival. Halliwells, which had turnover of £78 million last year, would then be dissolved. A spokeswoman said that the negotiations were at an advanced stage and that all options were on the table. She could not rule out job losses, but emphasised that client funds were not at risk.
Halliwells, which was founded in 1975 and has 115 partners and about 700 staff across four offices, revealed yesterday that it had informed the courts late on Thursday of its intention to appoint an administrator. It said that high property costs and declining profitability had left it unable to cover operating costs. Its biggest creditor is the Royal Bank of Scotland, which is owed close to £20 million.
Halliwells said that its underlying business — it is best-known for its insurance litigation practice — remained healthy and had attracted interest from a number of potential buyers.
The firm had been one of the legal market’s highest fliers for much of the past decade, growing rapidly through a series of mergers and expanding beyond its Manchester base to open offices in Sheffield, Liverpool and London. It completed several mergers as revenues rocketed from around £50 million in 2005 to £88 million in 2007, before the financial crisis hit. Profits reached £26 million and its highest-earning partners made more more than £600,000.
Led by Alec Craig, senior partner, and Ian Austin, managing partner, Halliwells unveiled plans to become one of Britain’s biggest regional firms. Their ambitions were underlined in 2005 when they signed a deal to become the anchor tenant in the expensive Spinningfields development in central Manchester.
However, the firm failed to attract the high-end work it coveted and was crippled by the cost of fitting out the Spinningfields property, for which it borrowed £18 million. Core clients — small listed companies and entrepreneurs — were badly hit by the downturn and profits and turnover fell sharply from their peak in 2007.
Sixty partners left, taking their capital with them, leaving the firm struggling to cover operating costs.
News that the firm had signalled its intention to appoint an administrator was greeted with disbelief in the legal market. Although rumours about the firm’s financial position had swirled around Manchester, few had expected it to be forced to seek a rescue.