Firms pay a high price for their burning ambition

Halliwells was a remarkable success story. The firm posted double-digit turnover growth for 11 consecutive years, winning it the distinction of being the fastest-growing firm since the LB100 began. As one partner puts it: ‘We’d never had any problem growing; it’s what we do.’

In this spirit, the Manchester firm had looked around at its North West rivals and appeared to fancy its chances of ‘doing a DLA’. Given Halliwells’ apparently ineluctable rise, this appeared a reasonable ambition. But, after an imprudent property deal and an ill-fated foray into London, this is no longer the case. It brings to mind that other expansionist Northern firm that encountered difficulties in London and racked up an overdraft: Hammonds.

Neither the property deal nor the move to London were necessarily ill-conceived. They were, however, poorly executed. The property deal, involving its offices in Manchester, was lucrative for sure: it bagged the partners £17m back in March 2007. But that’s just it: the money was distributed there and then and not reinvested in the firm.

The move into London resulted in a reasonable platform, with litigation, property and corporate performing well at first. But, to continue its astronomical rate of progress, the firm had to attract top names and pay over the odds for partners who weren’t able to deliver anticipated billings. Similarly unsuccessful moves, such as the James Chapman merger in 2005, led to the firm running up a £23m overdraft. And this is no time to be carrying that level of debt.

Perhaps it’s time for Halliwells to cut and run in London and consolidate its strong base in the North. But this isn’t straightforward given the importance of the office to big-name clients such as Tesco and Legal & General. The one comfort for Halliwells is that, unlike Hammonds, it doesn’t have the additional cost of an international network pushing up that overdraft.