A former Cobbetts partner who is the firm’s biggest individual creditor has spoken for the first time about his allegedly ‘poor treatment’ when the national firm failed last year.
Andrew Wright, now 64, left Cobbetts in February 2012 to join Canadian outfit Gowlings, leaving hundreds of thousands of pounds invested in the firm as part of the terms of his exit.
When DWF acquired Cobbetts almost a year later under a controversial ‘pre-pack’ deal, which saw administrator KPMG grant DWF confidential exclusivity, Wright lost almost all of his money.
Unsecured creditors, of which he is one, are expected to get no more than 2p in the pound. Yet those who were partners at the time of Cobbetts’ collapse had their capital contributions protected. The costs of the administration have topped £1m.
Wright, who is facing the loss of his family home, said he is speaking up now because he wants regulators to ensure such a situation ‘can never happen again’. Last month, a government review of highly controversial pre-pack buyouts ruled out legislation, recommending only cosmetic changes.
Wright and fellow Gowlings partner Charles Bond, who left Cobbetts at the same time, wrote to Cobbetts partners last year urging them to honour their ‘moral and legal obligations’.
Wright told the Gazette: ‘Legal action still remains a strong possibility.
‘I was treated very poorly. I worked for 40 years as a lawyer and face losing our family home and, like Charles, a lifetime of savings.’
Wright believes the episode has brought the profession into disrepute and raises urgent questions about what it means to be a solicitor.
‘It is very bad for the profession when everything you save you can lose in that way.
‘DWF [which abandoned earlier merger talks with Cobbetts in 2012] could have written us into the agreement, especially since they must have been aware that they would make thousands in fees stemming from our goodwill left in Cobbetts.’
He added: ‘A wider question arises: are we solicitors or business people? Solicitors are supposed to owe a higher duty of care to lay people and indeed to each other. Has that gone in the modern world? Should not the duties and responsibilities of solicitors be overlaid on top of the insolvency legislation?’
As an additional good governance safeguard, Wright believes law firms exceeding a defined turnover threshold – perhaps £40m – should be required to appoint two non-executive directors, including one from the financial services industry.
Andrew Leaitherland, managing partner and chief executive officer of DWF, said: ‘Andrew Wright and Charles Bond took a personal decision to leave the Cobbetts business at least a year ahead of the firm going into administration.
‘We understand that the terms upon which they left were freely negotiated by them as part of their exit.’
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