The Halliwells partners facing a £21m High Court claim by the firm's administrators are set to enter mediation in an effort to avoid a lengthy court battle.

BDO launched the claim in July against a group of 32 ex-partners – including former chairman Ian Austin – in a bid to reclaim more than £21m gained through a controversial 'reverse premium' property payout.

The partners have agreed to enter mediation with the intention of settling the claim out of court, although the first meeting is unlikely to happen before the new year.

Joint administrator Dermot Power told Legal Week: "My view is this is a precursor to arbitration or a full court hearing. We go into mediation with an open mind, but in no way does this mean that there will automatically be a settlement."

Addleshaw Goddard is advising BDO, while litigation firm Peters & Peters acting for 30 of the 32 defendants.

As previously reported by Legal Week, BDO's claim outlines three main areas where the partners breached their obligations to the firm through the reverse premium property payout.

These are: breaching Halliwells' partnership deed by failing to act in good faith and parting with the LLP's property "otherwise than in the ordinary course of business"; breaching their fiduciary duties to act in the best interests of the firm, not to make a "secret profit" and not to prefer their personal interests over the firm's; and breaching the Limited Liability Partnership (LLP) regulations 2001.

The form also says that in the case that any of the defendants did not commit these breaches, the claimant seeks a declaration that they knew the payments received had been "caused or permitted pursuant to the aforesaid breaches", or that they were "unjustly enriched" at the expense of Halliwells LLP.

News emerged last month that BDO had secured a six-month extension to its term overseeing the Halliwells administration.

According to its latest progress report, BDO has run up fees of £1.06m for 5,013 hours of work at an average rate of £212.69 per hour on the administration.