Halliwells’ successor firms told to plug £500,000 hole

THE three firms which bought the various parts of the Halliwells business have been informed by the Solicitors Regulation Authority (SRA) that they could be held liable a shortfall of £500,000 in the collapsed law firm’s client account.

According to legal newspapers The Lawyer and Legal Week, the firm owed £305,000 not directly to clients but as disbursements to barristers’ chambers who had worked for the practice. This has subsequently racked up £272,0000 worth of unpaid interest.

The SRA’s own lawyers, Bevan Britton, have written to the three firms which picked up parts of the Halliwells business – Barlow Lyde & Gilbert, Gateley and Hill Dickinson, warning them that they should cover the shortfall or face investigation.

It has also written to lawyers acting for the firm’s administrators, BDO, arguing that the shortfall in cash “raises issues in the public interest as to whether the firm was properly managed and whether the trust the public places in the legal profession has been diminished” as a result of the firm’s collapse.

Halliwells was broken up in August last year in an 11th hour deal just before the firm was placed into administration.

Administrators’ documents filed since then have showed that the firm’s debts topped £200m, although £176.5m is an unsecured creditors’ claim from the landlords of its 3 Hardman Square headquarters for the remaining 17 years on its lease.

Rod Waldie, head of office at Gateley in Manchester, said in a statement: “The figures stated in the SRA’s letter are notional and refer to a ‘theoretical’ loss should the three purchasing firms – Gateley, BLG and Hill Dickinson – not meet these responsibilities.

“Gateley has been fully committed to ensuring that none of its clients have lost out and we are extremely respectful of our obligations in respect of solicitors’ accounts rules.

“This whole matter is part of ongoing contractual discussions between the purchasers and the administrator, BDO, which relates to monies due to the purchasing firms.  This discussion is entirely separate from the clients’ position.

“Gateley – as with all purchasing firms – has achieved great success in seamlessly integrating both its employees and clients into the business, while ensuring excellent client relations and strong client retention. We are not aware of any client complaint in relation to this matter, nor do we anticipate any.”

Hill Dickinson and BLG have declined to comment on the matter.