Halliwells has gone from sustaining blistering growth for a decade to becoming the largest legal casualty of the recession. Claire Ruckin goes behind the headlines to expose the drama and confusion of the northern giant's collapse

On 24 June 2010 Halliwells filed an intention to appoint an administrator and promptly sent shock waves through the legal profession. The move unambiguously signalled that the firm had failed as an independent commercial concern and was now locked into an effective fire-sale of its assets and practice. By 20 July deals had been agreed to transfer the bulk of the firm's staff to four law firms, with millions in liabilities left to be sorted out by its administrator.

Having limped through the recession, one of the UK's largest law firms had failed – an outcome so rare among the upper echelons of the UK profession that, despite a well-documented period beset by substantial problems, few thought that Halliwells would really fall.

As one former equity partner puts it: "When I left just over a year ago it was not doing as well as it might have been and people were not happy, but I never seriously thought that it would fold."

Another ex-partner who was at the firm until its end recalls: "People still didn't know what was going on with their future when the notice of intention was filed – it really was an absolute mess in the end and some people were signing deals completely last minute."

The final four weeks before the sales were approved by the court were chaotic, with the rescue deals frequently appearing as if they would fall through.

With a six-figure sum being spent weekly on administrator BDO's services, after numerous discussions and partner votes, Barlow Lyde & Gilbert, HBJ Gateley Wareing, Hill Dickinson and Kennedys agreed to buy the various components of the firm from its largest creditor, the Royal Bank of Scotland (RBS). The £7m price tag left the bank to write off millions, possibly as much as £15m by its own estimate. HBJ Gateley senior partner Michael Ward recalls: "The most difficult part of the process was the deadline, which had to be met."

A senior partner from an acquiring firm recalls not knowing how many partners were joining until one hour before the final deal was signed and received court approval. The firm in question is still trying to ascertain which clients the team has actually brought with them.

Hill Dickinson had done more groundwork than the other firms, as it had previously looked into acquiring the whole of Halliwells, a deal which fell through in June once it became clear that certain insurance and banking clients were unlikely to move to a new firm.

But although Hill Dickinson knew the Liverpool office well, it had only two weeks to do the due diligence on the team it took in Sheffield. Hill Dickinson managing partner Peter Jackson comments: "Fresh issues concerning all the deals were arising the whole time. This was due to the number of parties involved but also because of the novelty of the situation; there was no protocol to be used as a reference. At times it was frustrating, which is not a criticism, because it was a very hard and complex process to go through."

He adds: "Getting the teams over was something that needed to be done quickly. I remember saying, 'Gentlemen, start your engines' as the ink was drying."

Given that the closest comparable incident to Halliwells' fate is the distressed sale of Turner Kenneth Brown to Nabarro Nathanson 15 years ago, it is no surprise that the market was in shock and the process was new to all involved.

However, examining the situation more closely with the benefit of hindsight, there were serious fault lines that had been dividing Halliwells for years before its collapse.

As the dust settles, for many shaken insiders Halliwells is a story of thrusting ambition, risky bets, some bad luck and a few decisions that were just plain bad. Some see something worse: greed, which eventually led to a firm which one former partner described as "unrecognisable as a partnership". What can not be denied is that, in the run up to its collapse, Halliwells had become a firm fatally divided.

Pride before the fall

Once, and not long ago, the future seemed so much brighter for Halliwells, a firm that had hugely ambitious plans and seemed to be in the habit of making good on them.

In the 1990s, the then Halliwell Landau had built a prominent place in Manchester's vibrant legal market, even as emerging national players had begun to seriously target the city.

While it was never regarded as an establishment firm like Addleshaw Booth & Co or Eversheds, Halliwells was viewed as a robustly entrepreneurial outfit, albeit one marked by an individualistic spirit not to everyone's tastes. The firm's expansionary zeal was already in evidence in the late 1990s under the leadership of senior partner Roger Lancaster when the firm doubled its turnover in the three years to 1999-00, earning more than £20m, while also launching a small London arm in 1998.

In 2001 Paul Thomas became the firm's first managing partner alongside well-connected senior partner Alec Craig. Around this time it became clear that the firm was already tiring of the scrappy outsider tag and was increasingly intent on modernising its brand to reflect its growing size and national prominence.

Taking over as new managing partner in 2004 after a contested election against Thomas, the affable litigation head Ian Austin supported this drive, with the firm pledging to improve communication and quickly deciding to convert to a limited liability partnership (LLP). The firm, also around this time, modified its 'eat what you kill' pay system in favour of a less aggressive modified lockstep.

However, two things did not change. The firm remained highly leveraged, with only a third of its partnership holding equity status, a factor that would, in its later years, aggravate its divisions. And Halliwells also remained strongly focused on growth, sometimes at the expense of profitability.

In the spring of 2006 Halliwells held a now-notorious partnership meeting in Prague. Confidence was sky-high – unsurprising, given the firm's record in sustaining incredible growth. Not content, Austin set out his vision for continued expansion and announced an intention to reach £70m in turnover for 2006-07, with projections that the firm would reach revenues of £128m by 2011, enough to push Halliwells into the UK top 25.

The firm was now increasingly focusing on mergers as a means of forging a genuinely national practice. Two deals came in quick succession, with the firm in January 2005 securing a takeover of 16-partner Liverpool practice Cuff Roberts and, 18 months later, 37-partner Manchester-based James Chapman & Co. The deals respectively brought in nearly £6m and £10m in revenue.

In 2005 Halliwells also worked out a deal to move to 3 Hardman Square in Manchester's commercial district, Spinningfields, in a bid to consolidate five offices and 700 members of staff into one location.

It was intended as a statement to the market, with the state-of-the art building designed to demonstrate Halliwells' newfound status. The deal was also conceived following a period of strong sustained growth and offered the firm considerable space for further growth.

Fatefully, the deal included provisions that were to generate a substantial payout for the firm's equity partners as an incentive for taking on the huge site as an anchor tenant.

The deal, struck in May 2005, allowed the firm to receive a portion of the value of the site's freehold, which was then sold to landlord Allied London. The payout increased because the firm took all eight floors of the building as opposed to the original intention of just the top four floors.

In total, £20.4m of the £24.5m payout the firm received in April 2007 was distributed among 40 equity partners, with some senior partners receiving around £1m.

In retrospect, this so-called 'reverse premium' is cited by some as an act of singular greed that most directly led to Halliwells' downfall, a decision which has heaped scorn on the firm's management, and Austin (pictured) in particular.

And there is no doubting the greatly increased liabilities the move piled upon the business, which contributed hugely to the firm's subsequent vulnerability and collapse.

However, in context it was a far more understandable tactic than some have allowed. Given the firm's huge growth trajectory over the preceding decade – a 2009 analysis by Legal Business concluded the firm was the fastest-growing top 100 firm in the UK over the previous 12 years – to many at the time it seemed a relatively conservative bet on the firm's future expansion.

Of course, the timing was also plain unlucky, with the UK economy falling into a largely unforecast and deep recession after the credit crunch took hold in the summer of 2007, which was to play havoc with Halliwells' property-heavy practice. If the firm was guilty of making a bet on the future, it is not difficult to see how it felt able to take on the level of liabilities given its earlier growth.

There were other aspects of the deal less easy to defend. The decision not to include any form of lock-in with the huge payouts meant that many of the equity partners subsequently left, putting a further strain on the firm's capital.

Only about 16 of the 40 reverse premium beneficiaries were still at Halliwells when it was broken up – indeed, some of the partners receiving the premium were already near retirement. As a means of investing in the firm's future, the deal was a total misfire. Others have questioned why more of the money was not used to cover the substantial costs of fitting out Spinningfields, which by this stage the firm knew it was set to incur.

But even more questionable was the decision to keep the payout secret from the firm's huge band of fixed-share partners, who had not benefited from the premium. Had the deal been more openly discussed within the firm, there would likely have been wider buy-in for the decision, and a sense that the entire partnership would have been 'blooded' with the move. Instead, when details began to leak in 2008, non-equity partners were in many cases furious, feeling that millions had been taken out of the firm and huge fresh liabilities assumed largely at their expense. Having weakened its finances just as the recession began to take hold, Halliwells' partnership was now deeply divided.

The way in which news of the payout eventually leaked also ratcheted up tensions within the firm. In 2008 a female assistant to an equity partner found out about the payout. The assistant, who at the time was in a relationship with a fixed-share partner, questioned him about his award. Perplexed, he asked her what she was talking about. Once she had explained the situation to him, he told a few partners and word travelled quickly to London. According to former partners, within a week everyone knew – including the catering staff.

The London partners immediately called a meeting with Austin who travelled down to the City to discuss the situation, but he failed to satisfy partners' demands for answers by repeatedly stating that he could not discuss the matter due to a confidentiality clause.

One partner in attendance at the meeting recalls: "Once the terms of the Spinningfields deal leaked out to the broader partnership, that was the tipping point at which the firm was irrevocably steering towards implosion through division. The fixed-share partners were not being given the full picture and it created ill-will and a mindset of 'us versus them'."

One fixed-share partner comments: "It was being run as something to benefit a very small number of people and was unrecognisable as a partnership."

Another former partner adds: "Culturally, it was a problem that the firm had grown too big too quickly, as it was still being run like a small firm. It was, in effect, run very tightly and closely by a bunch of mates – a very unsophisticated management mechanism."

The atmosphere of rumour and counter-claim damagingly put the firm's management on the defensive, including with the media. Among publications to receive heavy-handed letters or emails threatening legal action were Legal Business, The Times, The Lawyer and RollOnFriday.

And there were other issues during this period as well. While the Cuff Roberts merger had been a happy experience, the James Chapman deal was more troublesome. For one, the Manchester firm's well-regarded commercial team was not part of the 29-partner deal, after opting instead to join Brabners Chaffe Street. In addition, James Chapman's large insurance team lost two key panel places with Zurich and Norwich Union around the time of the deal – undermining the rationale for the merger. Partner departures from the James Chapman side soon began to pile up.

Meanwhile, the firm's London arm, which had made a number of misfiring lateral hires, was heavily impacted by a slump in AIM work, causing it to fall well short of its budget targets for 2007-08. The firm, as early as February 2008, announced a redundancy round that affected around eight staff in London, making Halliwells one of the first UK law firms to resort to formal redundancies as the UK economy slowed drastically.

Against this stormy commercial backdrop and internal tensions, Austin faced more troubling news in 2008. The firm needed to take out a £19.8m loan from RBS, secured by a debenture, to fit out Spinningfields as well as conduct a mandatory capital raising by doubling the value of an equity point from £20,000 to £40,000.

Fixed-share members were asked to contribute up to £30,000 each. The firm turned to Handelsbanken to provide related professional practice loans. It is fair to say that the capital raising, which generated around £5.5m, was badly received, with many partners noticing that a firm that had until recently had little or no debt was now borrowing a sum roughly equivalent to that paid out to equity partners from the reverse premium. Some left the firm, while others chose to leave the equity ranks and become salaried partners on the basis that they felt they were not being given the firm's true financial picture.

One partner comments: "It was all vague promises. We were not being given the amount of information that in my line of work we have to give to our clients as investors."

Another partner adds: "We demanded a meeting with Austin because of concerns we had about the firm's position over our tax money. The figures, which were supposed to comfort us, freaked us out even more. A number of partners converted to salaried status there and then.

"When they asked for the money, we thought it was utterly outrageous and desperate. There were two camps – those who said they wouldn't put money in and knew they could move easily, and those who were terrified of upsetting management and felt they had no choice."

Against this background, and with four redundancy rounds taking place between February 2008 and March 2009 compounded by a host of partner exits, falling turnover and profits, increasing debt and a recession, the firm found itself in serious difficulties by the middle of September 2009. Drastic measures were needed to try and turn things around. Enter Jonathan Brown.

'Deckchairs on the Titanic'

Brown took over as managing partner in September 2009 with a huge challenge on his hands. It was not a job that he particularly wanted, being content with the role of Liverpool office managing partner, but he took on the brief nevertheless.

He was the obvious candidate to try to reunite the firm given that he was based in Liverpool and had not benefited from the reverse premium on Spinningfields, a qualification that had taken on huge significance within a firm rife with factions.

By many accounts, this meant that Austin was effectively sidelined in the newly-created role of chairman, leaving Brown attempting to turn the ship around. The firm had held unsuccessful talks with Manches that autumn, but a merger was still very much on the agenda, both as a means of regaining the firm's growth trajectory and stabilising the business.

However, Brown first had to concentrate on making the business more attractive. Reorganising the finances was a priority, as was maintaining the partner headcount, which had already fallen by around 30 over the previous 12 months.

Looking at the numbers, it quickly became apparent that the firm was not in good shape, in part because of its annual property liabilities of £6.6m for unused floor space in both the Spinningfields and London offices, as well as on the lease of former Manchester offices in King Street and St James's Court (a guarantee was agreed for the rent on the unfilled space at St James's Court until 2013).

But what little breathing space the firm had was to be squeezed out in December by the news that a 70-strong team from its Sheffield office, including high-profile partner Suzanne Liversidge, was leaving to set up a local office for fast-rising rival Kennedys.

A partner in management at Halliwells comments: "The Kennedys departures were a significant blow, but it was just part of the leaver phenomenon. So many equity partners had already left in 2009."

By February, 48 partners had left or were set to leave within the space of 18 months. Halliwells took drastic measures and turned to RBS to work out a deal to reconstruct the firm's finances, changing its terms and conditions with the bank, which were close to being breached. Instead of guaranteeing a minimum number of 37 equity partners in Halliwells, Brown agreed to keep a minimum of £12.9m in the firm.

Brown also extended Halliwells' facilities from 2011 to 2013 and reset a number of the covenants on the debt. The £19.8m-worth of facilities, secured by debenture, involved a £5m term loan, a £2m overdraft and a £12.8m revolving facility. The firm aimed to reduce total debt by 50% over the three-year period.

Brown also locked in member capital that had not been borrowed through a professional practice loan until 2013.

In addition, the firm raised extra capital through a voluntary cash call in early 2010 which saw 28 partners contribute. This time the firm turned to The Co-operative Bank for the practice loans. Partners who had taken the reverse premium put in £20,000 per equity point, while those who did not get anything out of the property deal put in £10,000 per point. This meant top-of-lockstep earners on 11 points who had received the reverse premium would have put in an additional £220,000.

Despite the refinancing and capital raising, it was fast becoming apparent that Halliwells' days as a solvent independent business were numbered as the firm reported its 2009-10 turnover to the bank, which saw the firm miss its fee income target by £4.8m.

Halliwells insiders attribute much of the fall in turnover to particularly poor trading between February and April 2010. One partner comments: "We had poor trading in the last six months of the financial year – we were [only] £2m down on the first six months of [2009-10]. This was due to the impact of leavers who had handed in their notice but [whom] we were still paying. They were either being less productive or clients were not instructing them until they joined their new firm. In addition, we couldn't attract new partners, so we were not replacing the leavers. Either way, the effect was that we missed our budget."

Halliwells had budgeted for a turnover of £70.7m in 2009-10 but one partner says that RBS, as its major creditor, had indicated that revenues of £67.7m would have been an acceptable result.

When the firm reported turnover of £65.9m, the bank apparently lost confidence and pressured Halliwells to search for a merger, or what in the circumstances was likely to become a fire-sale.

From April 2010, the firm made presentations and provided information to over a dozen firms including two based outside of England, one of which was in the US. A merger committee was formally set up in May 2010 and consisted of Brown, Rod Waldie (now HBJ Gateley Manchester head), insurance division head Kevin Finnigan, insurance partner Damian Ward and employment partner Michael Ball. Neither Austin or Craig were part of the committee.

Halliwells had already been speaking to Hill Dickinson – Brown and Hill Dickinson's Liverpool-based managing partner Peter Jackson (pictured) already knew each other well. During the spring, it seemed that a deal for the firm in its entirety would happen, with Hill Dickinson formally offering to put up something in the region of £12m, a figure that RBS was looking to receive for the whole firm.

However, issues were arising within the partnership as to where they wanted to go. The Manchester insurance team was torn between Hill Dickinson and a deal with City insurance specialist Barlows, in part over concerns relating to client preferences.

By June RBS had revoked Halliwells' overdraft and the whole-business deal with Hill Dickinson was off. It became clear that the firm would have to be split up, and in the period that followed a number of firms entered the fray. An orderly deal was no longer an option.

Just nine months after Brown took over as managing partner, Halliwells filed a notice of intention to appoint an administrator with the court, triggering a moratorium on its liabilities, allowing the firm to finalise the sale of its assets.

One senior Halliwells partner comments: "It was incredibly complicated and there were some deals that got close. The firms involved and arrangements of who was going where based on people's preferences was changing day by day."

The deal that most changed from its initial proposal was the Barlows arrangement. Barlows had originally floated paying £5m, but when news of the proposed deals leaked, Barlows – which was already concerned about whether it could sell the deal to its partnership – became worried it was over-paying. The firm readjusted its offer to £2.5m and decided it would not take on all staff.

Despite the chaos of the late-stage talks – on 7 July Halliwells filed a second court notice to extend its bankruptcy protection for a further 10 working days – the deals were finally agreed by the respective partnerships and backed by the High Court on 20 July. A total of just £7m had been achieved for a firm that had generated nearly £90m in fees at its peak as a near debt-free business.

As one former partner comments: "Brown was a nice guy but it was like he was trying to reorganise the deckchairs on the Titanic – by the time he got in, it was too late."

Loose ends and recriminations

With the break-up and sale now complete, there are mixed feelings among the profession as to how well the transferring teams will fare or how the drama of Halliwells will ultimately unfold in the wake of the firm's demise.

It seems clear that Hill Dickinson got a good deal, with the acquisition of a solid healthcare offering in Sheffield that complements its existing practice. Likewise, the Liverpool team, which was well known to Hill Dickinson, had been little touched by earlier departures and is viewed as a sound acquisition.

HBJ Gateley has also picked up a number of respected operators in its 38-partner haul, even if there remain questions over the cultural alignment of the team. Many of the partners the firm took on were among Halliwells' most influential lawyers, including at least 10 who received the reverse premium.

HBJ Gateley maintains that it has clearly spelled out its culture of 'one member, one vote' to the incoming partners (at Halliwells, votes were weighted based on the number of equity points held). The deal will certainly give HBJ Gateley a chance to make a sizeable impact in the competitive Manchester market.

Barlows has clearly acquired an effective insurance practice – one that many argue is far stronger than the tarnished Halliwells' brand suggests. The key issue for Barlows, which is counting on the deal to bring in regional bandwidth and access to Halliwells' well-developed IT systems, will be retaining key clients such as Chartis. As the previous James Chapman deal indicated, such clients can be uncomfortable with the upheaval of mergers.

With separate LLPs set up for the partners who joined Barlows and HBJ Gateley to contain liabilities that come with the business, a period of consolidation and integration will be on the agenda. However, it is unlikely that any of the former partners now in their new firms will be able to easily walk away from the aftermath of Halliwells' collapse.

While RBS expects to write off millions in corporate debt, it is unlikely to adopt the same policy with professional practice loans owed to them. (Court documents filed in July 2010 state that RBS was owed "approximately £18m" at the time of the Halliwells sale.)

Those who will find themselves most exposed will be the partners who exited Halliwells to join firms that were not eventually part of the deals worked out with the administrator. Some of these partners now face the possibility of being asked to pay back hundreds of thousands of pounds.

The onus will be on their new firms to give assistance to partners facing the prospect of bankruptcy and potential expulsion from their new partnership – a fear that is rife among ex-partners. (The acquisitions by Barlows, Hill Dickinson and HBJ Gateley are all structured to protect transferring partners from personal insolvency due to professional practice loans and include guarantees or provisions to use some of the proceeds of Halliwells' debtors and work in progress to address such liabilities.)

There will be much focus on whether anyone will attempt to bring legal action against Halliwells' management in relation to controversial financial decisions and the communication of the firm's finances. This will be most pressing in cases regarding discussions of capital raising and tax liabilities.

It is also likely that BDO, as Halliwells' administrator, will look into the Spinningfields deal in depth to assess any options to claw back money.

Former equity partner Paul Thomas, who was a guarantor on the St James's Court office, has already send out letters to the former 40-strong equity partnership appealing for a contribution towards the £3m still left on the lease, which runs until 2013. Even with a potential discount, the equity partners are still likely to be liable for at least £25,000 each, though liability on the matter is likely to be disputed. Some individual partners believe they face unsettled liabilities well in excess of £500,000. One senior partner is believed to have a potential liability of around £650,000, purely for professional practice loans.

The fundamental state of the firm's finances in the two years before its collapse will certainly come under scrutiny. Despite being an LLP, the firm was less transparent financially than many peers and there remain disagreements regarding the state of the firm's profitability.

A number of partners believe that Halliwells effectively paid out profits that in reality it did not have. One partner estimates that in 2009-10 equity partners took overpaid drawings of £1.8m.

For many, Austin and Craig have become the focal point of their anger in the wake of the firm's collapse, with the latter in particular facing much criticism for taking a low profile since the firm's administration. Yet in many ways the personable Austin was the natural choice to lead a firm that prided itself on its entrepreneurial culture and was widely lauded during its meteoric rise. The risks that Halliwells took under Austin were a product also of the firm's culture, and were partly exposed by a measure of bad luck. However, it is less easy to be forgiving of some of the lapses of communication that contributed hugely to the firm's cultural meltdown.

Every member of Halliwells has their own tale to tell or opinion on why the firm eventually collapsed. These anecdotes vary depending on where the partners were based, whether they received the Spinningfields payout and where they ranked in the partnership.

In a melancholy mood, one former partner expresses: "The Spinningfields deal, the recession and the leavers were all needed to put the firm out. Not that the leavers were to blame, but we lost about a quarter of our equity partnership, which could be linked to the discontent over the property deal, within a very short space of time. Any firm would feel that strain.

"Every company that goes bust blames the bank, but I don't blame them. At the end of the day, Halliwells borrowed too much money and didn't pay it back. It is not the bank's fault – it is our fault. The bank refinanced us, gave us a chance and we missed our targets."

In the end, Halliwells' fall was largely down to division. The individuality and drive that had been a huge strength during its rapid ascent became its greatest failing. Office against office, partner against assistant, management against staff and, most damagingly, thanks to the Spinningfields saga, partner against partner. That bitter division could be playing out for months or years to come.

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Everything must go – how Halliwells was carved up

Barlow Lyde & Gilbert

- Separate limited liability partnership (LLP) for the joining partners including a partner lock-in.
- Barlows will pay £2.5m in four tranches over 12 months and committed to guarantee or replace professional practice loans up to a liability cap of £1.49m.
- The practice comprises the vast bulk of Halliwells' insurance team, covering 18 partners in Manchester and two partners in London. In total the firm took on 238 staff, including 65 fee earners.
- Notable partners: insurance specialists Peter Walmsley, James Dadge and Kevin Finnigan.
- Notable clients: AIG, Chartis and NFU Mutual.

HBJ Gateley Wareing

- Separate LLP created for joining partners.
- Lock-in with partners in the separate LLP, with partners only able to take out up to £7,500 a month.
- The firm agreed to pay £2.55m structured as £300,000 initially then £1.5m within 210 days, then £750,000 spread over five years; 10% of receipts over £1.8m is allocated to the LLP (subject to a cap of £500,000).
- The team comprises 35 partners in Manchester and three in London in Halliwells' commercial team covering banking, corporate, property, insolvency, litigation, employment, pensions and construction.
- In total, 200 fee earners and staff have transferred.
- Notable partners: Karen Spencer (construction), Charles Glaskie (corporate), Patrick Kennedy (pensions), Guy Guinan (employment) and Andrew Piatt (planning).
- Notable clients: Euler Hermes, AIG and the British Medical Association.

Hill Dickinson

- Partner lock-in.
- Firm will pay £1.88m structured as £500,000 initially, then will give additional consideration from realisation of receipts up to a maximum of £3.35m. (£1.38m allocated to the LLP and £1.97m allocated to the members' reserve to pay off professional practice loans.)
- The deal covers the entire Liverpool office including 19 partners, 41 fee earners and 29 support staff as well as 36 staff in Sheffield, including nine partners, 20 fee earners and seven support staff.
- Notable partners: Alastair Reid (property), Jonathan Brown (former managing partner) and Neil Thompson (corporate).
- Notable clients: Everton Football Club, Stobart Group, Thomson Reuters, Johnson Service Group and Carrs Milling.

Kennedys

- Firm will pay £125,000 initially, then 80% of all debtor receivables collected.
- The deal covers a Sheffield-based team of 10 partners and 55 fee earners, bringing in 70 staff in total.
- Notable partners: Suzanne Liversidge (insurance) and Cameron Clark (insurance).
- Notable clients: Cleveland Potash and UK Coal.

Other firms to pick up partners include:

Pinsent Masons – Mike Edge and Rachel Pitman (property) Richard Slaven (litigation). The firm has also hired seven fee earners.
DWF – Stephen Morris (litigation) as well as a fee earner.
Fasken Martineau – Catherine Moss (corporate) as well as two fee earners.
Shoosmiths – Mark Dawson (corporate) and two fee earners.
Hammonds – Mark Gaffney (property).
Nabarro – Dean Gormley (banking).

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Slouching towards Bethlehem – Halliwells' rise and fall

2004 Litigation head Ian Austin takes over as managing partner of the then Halliwell Landau from Paul Thomas following a contested election. The firm elects to rebrand as Halliwells and convert to a limited liability partnership (LLP).

January 2005 Halliwells secures merger with 16-partner Liverpool practice Cuff Roberts, adding nearly £6m a year to its turnover.

2005 The firm agrees a deal to consolidate five offices and 700 members of staff in Manchester into one location in Spinningfields, in the city's commercial district.

2006 The firm secures a merger with the bulk of Manchester-based practice James Chapman & Co to create the largest commercial firm in the northwest region, with fees in excess of £80m.

2006-07 LLP filings for the financial year show operating costs rising by £16m to £61.6m. Bank loans and overdrafts stand at £3.7m.

2007 Move to 3 Hardman Square, Spinningfields. Multimillion-pound 'reverse premium' paid out on completion of the building. The payout was £24.5m, with £4.1m reinvested in the firm and the rest (£20.4m) divided among Halliwells' 40 equity partners.

February 2008 First redundancy round announced, with the closure of two City teams and redundancies of support staff in Manchester. Approximately eight staff affected.

September 2008 Second redundancy round launched in real estate practice concerning 20 fee earners and 20 support staff across the firm's four offices. As a result, 20 staff are laid off, with a further six redeployed throughout the business.

October 2008 Details of reverse premium on Spinningfields goes public following a report by Legal Week. Third redundancy round made within the banking and corporate departments.

End of 2008 Halliwells reorganises its borrowings with Royal Bank of Scotland (RBS), with a £19.8m loan used to fit out Spinningfields. The loan is secured by a debenture with the bank, which gives the lender security over the firm's assets. The firm carries out a mandatory capital raising from partnership by doubling value of an equity point from £20,000 to £40,000 while fixed-share partners are asked for up to £30,000 each – professional practice loans are taken out with Handelsbanken to back the £5.5m capital injection.

March 2009 Fourth redundancy round concerning 15 real estate fee earners and 15 support staff. Entire 2009 trainee intake (39 people) deferred.

September 2009 News of merger bid between Halliwells and Manches emerges, but talks are quickly abandoned. Liverpool office head Jonathan Brown becomes managing partner, while Austin takes up newly-created position of executive chairman.

December 2009 A team of 70 staff in Halliwells' Sheffield office, including eight partners, announce plans to leave the firm and set up an office in the region for Kennedys.

February 2010 Halliwells renegotiates £19.8m of bank finance facilities for three years involving a £5m term loan, a £2m overdraft and a £12.8m revolving facility. Total debt stands at £22m. Halliwells is no longer required to keep 37 equity partners in the firm, instead guaranteeing a minimum of £12.9m in capital at the firm. Voluntary capital raising of £2.3m sees 28 partners put money into the firm via their own means or professional practice loans taken out with the The Co-operative Bank. Partners who took the reverse premium put in £20,000 per equity point and those who did not put in £10,000 per equity point.

Early 2010 Merger talks begin with Hill Dickinson.

April 2010 RBS presses Halliwells to find a merger partner after budget targets missed. Presentations are made to more than a dozen law firms. Dow Schofield Watts, a corporate finance boutique, appointed to advise.

May 2010 BDO appointed.

24 June 2010 Halliwells files a notice of intention to appoint an administrator in the High Court, signalling a fire-sale of the business. The expectation is that Hill Dickinson will secure a takeover of the bulk of Halliwells; however, it soon emerges that Barlow Lyde & Gilbert is intent on absorbing the Manchester insurance team. DWF and Keoghs also hold discussions with the firm.

7 July 2010 Halliwells files a second notice of intention to appoint an administrator in a bid to buy more time to secure the sale of the firm without entering into administration. The firm is given until 20 July to conclude any potential deals with other firms.

12 July 2010 Executive chairman Austin announces he is set to join Manchester firm Heatons as the firm's new head of commercial litigation.

16 July 2010 Barlows and HBJ Gateley Wareing partners back proposals to acquire parts of Halliwells' business.

20 July 2010 Court approves the break-up and sale of the remaining business

For more, see Editor's comment: Pride before the fall

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