ONE of the administrators of Halliwells last night said the collapse of the North West firm should be a wake-up call for its rivals.
Two business restructuring experts from BDO were appointed joint administrators of the troubled firm on Tuesday.
Halliwells’ partners said the firm suffered a cash flow crisis because of high rent demands and a slump in work brought on by the economic downturn.
One of the administrators, BDO partner Dermot Power, said: “It is well known that the firm assumed substantial property obligations in recent years which significantly increased operating costs. This, together with the slowdown in transactional activity in the current economic climate, put unsustainable pressure on cash flow and the partnership resources.”
But he added: “Other professional firms will have to pay far greater attention to management and particularly cash management, following the stress testing of an LLP frame work which has been less than robust.”
Halliwells was sold off to three rival firms, including Liverpool- headquartered Hill Dickinson.
The Liverpool firm took over Halliwells’ nearby Old Hall Street office, which saw 89 staff transfer, as well as part of its Sheffield outlet.
Partners at Hill Dickinson expect the move to add £10m a year to its fee income.
Commenting on the transaction, Mr Power continued: “Securing sales of the business to other highly regarded firms, which will protect approximately 700 partner and staff jobs, is positive news for the employees and the industry as a whole.”
But BDO also confirmed 33 of Halliwells’ Manchester staff and five based in London – including one partner – will be made redundant.
BDO also said: “BDO LLP business restructuring partners, Dermot Power and Shay Bannon, were appointed joint administrators over Halliwells LLP late on Tuesday, July 20, 2010. Shortly after appointment, the entire business was sold in a number of separate transactions.”
Halliwells’ demise led one Liverpool lawyer to warn firms of a “triple whammy” hitting or due to hit them.
Mace & Jones corporate partner Ian Hodgkinson listed the recession, the Legal Services Act and the looming professional indemnity insurance renewals due in October as potential threats. He said: “The advice to law firms feeling the strain is to seek professional partnership law advice now. Solutions can be found, but time is of the essence.”
