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Towry hit with £2.3m bill after Raymond James case

by Jun Merrett on Jun 18, 2012 at 07:45

Towry hit with £2.3m bill after Raymond James case

National IFA Towry has been hit with £2.3 million of legal costs due to its high-profile court battle with Raymond James.

Towry lost the case, in which it was seeking damages of £6 million, alleging seven former Edward Jones advisers who joined Raymond James had solicited clients, and was ordered to pay legal costs of £1.2 million.

Those costs have contributed towards a total bill of £2.3 million related to the cost, which Towry has disclosed in its accounts for 2011. 'Litigation costs in 2011 relate to a court case involving the actions of former advisers and reflect the total estimated costs payable by the group,’ it said in the accounts.

Chairman Glyn Jones added of the case: 'We were unsuccessful in our claim and it is now clear that whilst our present standard of both non-solicitation and non-dealing clauses are accepted by the court as being legitimate, the required level of proof to succeed in a claim for a breach of a standalone non-solicitation clause is very high.'

Towry also incurred exceptional regulatory costs of £1.3 million in 2011, including a fine imposed by the Financial Services Authority (FSA) in September of £494,000 for providing misleading information to the regulator and client money breaches.

The accounts said: 'Exceptional regulatory costs in 2011 relate to improvements to our client money and asset procedures and controls following a review of this area by the FSA.'

Towry hit profitability in 2011 reporting a pre-tax operating profit of £10.2 million, following a £5.5 million loss in 2010, as it incurred costs related to the integration of Edward Jones, which it bought in October 2009. The firm’s revenue also increased to £84 million, from £79 million in 2010.

8 comments so far. Why not have your say?

Man in Black

Jun 18, 2012 at 08:27

I guess you have to ask who took the decision to pursue this litigation and how the downside was assessed and quantified.

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Adam Grant via mobile

Jun 18, 2012 at 09:25

@ MIB It wasn't assessed or quantified as Towry did not believe there was any chance of losing. They didnt even read the witness statements for goodness sake,...

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Anitaki

Jun 18, 2012 at 09:39

Man in Black said > > > "I guess you have to ask who took the decision to pursue this litigation and how the downside was assessed and quantified"

That is a brilliant comment and if only other people took a more pragmatic approach before throwing client/policyholders/other people's money at the legal profession, to fight cases where there is little chance of success, l think we would all benefit.

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Paul Howard

Jun 18, 2012 at 09:48

Well, I would guess Towry's Legal team indicated 'a high chance of sucess'....

...after all, it was a Win Win for them.

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James Clancy

Jun 18, 2012 at 18:12

Have to agree.

What would have been the outcome if this was a directors personal money would they have taken the same decision to start litigation.

£2.3 million seems an awful lot of money to rest on the principle.

Perhaps, it would have helped the directors come to a different decision. If they had heard the comments. I once heard (that still sticking in my memory ) from the late George Carman QC while been in his company in one of his famous watering holes in Manchester, after he had won a famous case

"Arrogance, when it comes to the law has a very expensive pricetag, . Even with deep pockets are very often you do not succeed."

But perhaps, in the directors were privy to the comments. The case may have never got to court

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Rob Stevenson

Jun 19, 2012 at 12:55

Not sure the assessment of risk can be done in such a binary way. Was this a straight win vs lose case? Or was it a bit of sabre-rattling that got out of hand?

With an IPO never far from the horizon and many senior employees holding share options or similar, doesn't it makes sense to demonstrate to future investors that advisers will think twice about cashing in their options and leaving in their droves, post-IPO.

After all, IFA firms are not known for building and retaining value, particularly through one or more acquisitions/mergers etc...

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Tony Clarkin

Jul 31, 2012 at 18:20

WWhere are your balls Honister advisers?

It may well be "consistent with the position taken by insolvency practitioners in previous insolvency cases in the sector" but this does not mean that you have to accept this as incontrovertible fact.

Grant Thornton’s arrogance is probably relying on the fact that few advisers in similar predicaments have had the balls, resources or organisational skills to challenge this in court.

There are several judgements which show that when advisers challenge, they invariably win.

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Knowledgable insider

Jun 16, 2014 at 11:21

Where the Client/Adviser relationship is close the operating employer of the adviser owns nothing! Therefore how can anyone possibly evaluate the value of shares in such a |Company?

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