Legal Business

Howard Kennedy faces £35,000 fine for lax client account handling but watchdog U-turn draws flak

Howard Kennedy faces £35,000 fine for lax client account handling but watchdog U-turn draws flak

Howard Kennedy and one of its former partners have been sanctioned for providing a client with a prohibited banking facility, with the top 100 UK law firm facing a £35,000 fine after a Solicitors Regulation Authority (SRA) investigation.

The ruling from the Solicitors Disciplinary Tribunal (SDT), which was published on Thursday (1 March), saw Howard Kennedy ordered to pay £46,950 in costs. Christopher Langford, a former partner and then consultant at Howard Kennedy, also admitted to facilitating payments in and out of the firm’s client account that were not related to any underlying legal transaction.

Between October 2010 and April 2012, on one ledger the client account was credited with €4.7m while €4m was debited. The transactions continued despite Langford being warned in 2012 by a colleague that ‘Howard Kennedy is not a bank and there is no good reason for continuing to act as one for this particular client’.

Langford received a £15,000 fine and was ordered to pay £24,300 in costs. No orders were made against three other members of the firm: Eric Gummers, Paul Amandini and Mark Johnstone. Howard Kennedy also admitted to failing to have adequate measures in place to regulate its client accounts.

In a statement, the firm said: ‘It is important to stress that we self-reported, and the judgment highlighted that we provided our full co-operation to the SRA. We would like to emphasise that the tribunal noted that there had been no loss to the client, that the client had made no complaint, and that all of the payments made were legitimate. There was no suggestion of any misappropriation or misapplication of client money.’

Despite the successful action, the SRA received critical words from the tribunal over ‘lack of transparency’ regarding a proposed regulatory settlement agreement (RSA) with Howard Kennedy. The regulator ultimately opted for a full action before the SDT. The tribunal noted that during a May 2016 telephone conference the SRA gave ‘a clear indication that… it was willing to conclude matters by way of an [agreed settlement].’

The watchdog argued it had a right to change its mind. Fountain Court silk Richard Coleman for the SRA, submitted that ‘to prevent the regulator from having open and frank discussions about the direction of its thinking, but not allowing it to change its mind on further considerations of any matter, would not assist the candid relationship between the regulator and the regulated’.

The tribunal ruled that the U-turn did not amount to an ‘affront to justice’, but said it was ‘sympathetic to the disappointment that was suffered by the respondents as a result of the SRA’s lack of transparency, and its failure to clearly advise of its change of position at the first opportunity’.

This is not the first time the agency has come in for criticism from the SDT, as the tribunal chastised the regulator for its handling of the action against Clifford Chance (CC) and its disputes partner Alex Panayides last year. The SDT was critical of the scope of the investigation, and noted the ‘striking’ similarity between the SRA’s charge sheet and the agreed outcome with CC .

The SRA did not respond by the time of publication.

tom.baker@legalease.co.uk

For more on the regulator’s crackdown on large law firms, read: ‘Off the Leash’ (£)

Legal Business

Five partners exit Irwin Mitchell as real estate team leaves for Dentons and Howard Kennedy

Five partners exit Irwin Mitchell as real estate team leaves for Dentons and Howard Kennedy

Irwin Mitchell has lost five partners from its London real estate practice, with a four-partner team defecting to Dentons and one joining Howard Kennedy.

London real estate head Rob Thompson joins Dentons with partners Lewis Myers, Rupert Dowdell and head of corporate real estate Jayne Schnider. London planning and infrastructure head Martha Grekos is expected to join Howard Kennedy.

Irwin Mitchell’s City real estate practice has been hit by a wave of departures this summer, with partners Jo Footitt and Louise Cartwright moving to Osborne Clarke in June.

Much of the Irwin Mitchell’s real estate team, including Thompson, Myers, Dowdell and Footit, originally left legacy SJ Berwin to join Irwin Mitchell in 2010 as part of a 20 strong team move, while Grekos arrived Irwin Mitchell less than 18 months ago from Eversheds.

Dentons UK managing partner Brandon Ransley said: ‘This is an excellent opportunity for us to acquire four market-leading real estate-focused partners. These partners have worked together for many years, and their arrival will add heavyweight investment expertise to our credentials, while significantly enhancing our existing capacity to deliver the corporate and finance aspects of big-ticket real estate transactions, both in the UK and internationally.’

The international firm also recently strengthened its London corporate practice with the hire of Jonathan Cantor from Nabarro, who specialises in real estate investment.

matthew.field@legalease.co.uk

Legal Business

HowardKennedyFSI adds £5m to top line as it acquires boutique firm CKFT

West End firm HowardKennedyFSI has today (1 May) announced it has acquired Hampstead boutique CKFT, a union that will boost its current revenues from £40m to £45m.

This deal comes months after the firm confirmed in it was in discussions regarding a tie-up with the now-defunct Davenport Lyons. After the talks collapsed in February, it emerged this week Davenport Lyons has since gone into administration and has been been largely taken over by Mayfair firm Gordon Dadds.

Howard Kennedy, meanwhile, has been on a run of consolidation in recent years, having merged with Finers Stephens Innocent in January 2013 creating a £40m firm with 207 fee-earners and 83 partners. However, this combination did dilute the profit per equity partner (PEP) figure by 50% from £259,000 to £129,000. The £5m boost in revenues could move Howard Kennedy several places up the LB100 rankings, making it a top-70 firm.

Of the latest union, Howard Kennedy’s joint managing partner Paul Millett said: ‘We have been working closely with the CKFT team over the past few months and feel that culturally they are a great fit for HowardKennedyFsi. Following the successful merger of Howard Kennedy and Finers Stephens Innocent in 2013, the firm has gone from strength to strength and we believe that joining forces with CKFT will further increase our expertise and capability.’

CKFT managing partner at Daniel Fireman, said: ‘We are delighted that this merger is now live. This is an exciting time for us and we look forward to joining HowardKennedyFsi and working together with them. We believe this move will allow us to broaden and deepen the expertise we are able to offer clients.’

sarah.downey@legalease.co.uk

Legal Business

‘Renaissance man’ Dembovsky leaves HowardKennedyFsi

‘Renaissance man’ Dembovsky leaves HowardKennedyFsi

Last year Legal Business described Howard Kennedy’s chief executive Mark Dembovsky as ‘renaissance man’, having taken charge of a West End firm on shaky ground in January 2011 and orchestrated the merger of Howard Kennedy and Finers Stephens Innocent, to create the £40 million practice HowardKennedyFsi.

Today, the top 75 firm announced that its first non-lawyer chief executive has resigned, leaving the existing management committee members Craig Emden, who is currently head of disputes, and former managing partner Paul Millett to take over as joint managing partners.

During his time at HowardKennedyFsi, Dembovsky (pictured) brought in a number of measures to address the firm’s profitability issues, including introducing a ‘financial hygiene’ scheme that includes chasing up old debts and a more active cash collection system.

With a 2012/13 profit per equity partner (PEP) of £129,000 the firm, on the face of it, was the worst performing firm in the LB100 by that denominator, with the next closest Manches, now taken over by Penningtons. However, that PEP figure was hit by the firm having moved to an all equity structure post-merger and, with the merger only just under its belt, it will be some time before its financial health can be accurately assessed.

Dembovsky’s destination was unknown at the time of writing but the former Deloitte accountant has good credentials, having previously worked with Linklaters to help it expand its global footprint and later acting as chief executive of Warner Cranston, which merged with Reed Smith in 2001. Dembosky then served as Reed Smith’s chief strategic officer for eight years until he started up Montana Associates in 2009 before a brief and ill-advised stint at now defunct Dawsons, which collapsed in 2011.

Commenting on the news of Dembovsky’s departure, Emden said ‘Mark is a true professional who has worked tirelessly to bring an intellectual and strategic rigour to our business. He has made enormous strides working with us to transform our two legacy practices and set us on a path of an exciting future for the merged firm.

‘We are committed to continuing the process of taking the firm forward and to capitalising on the firm foundations Mark has helped us lay down. We are sad to see Mark go and are sure that he will make a significant and positive impact on whatever he turns his hand to. We wish him well for the future.’

Dembovsky added: ‘It has been a privilege to have worked for the last three years with very special people on a programme of change that has seen Howard Kennedy and then HowardKennedyFsi take on a focused and game changing approach to the provision of legal services to its impressive client base and wider market. I wish the firm every success in the future and am sure that it will continue to go from strength to strength.’

caroline.hill@legalease.co.uk

Legal Business

Renaissance Man

Renaissance Man

Mark Dembovsky joined Howard Kennedy as chief executive in January 2011, charged with turning around the fortunes of a West End firm widely considered to be on shaky ground. A year on, LB assesses his progress.

Sitting in on one of the newly established management meetings in Howard Kennedy’s West End offices, it is initially hard to work out exactly who is in charge. Head of corporate Michael Harris, property finance chief Jason Lewis, and dispute resolution head Craig Emden all chip in to answer questions about the firm and its new strategy, while one member of the group sits watching quietly. Suddenly one of the partners falters, unsure of how to answer a question about what the firm’s new ‘Aiming for Excellence’ scheme entails, and the quiet man springs into action.

Legal Business

Renaissance man

Renaissance man

From challenged leader to merger architect and LB Management Partner of the Year – it’s been quite a turnaround for Lovells’ David Harris

When David Harris collected his Management Partner of the Year award from Legal Business at Grosvenor House in mid-February, it wasn’t just the David Bowie soundtrack that brought a smile to his face. Though Bowie is a hero of this polo-playing guitarist, that smile was prompted by the day job, and the apparent vindication of his ambitious plan to transform Lovells from a mid-tier everyfirm into a global player.