Before Jiten Kotecha became Senior Counsel, Labour & Employment at Cummins, his career included a short spell at Olswang. Kotecha was there in 2010. Years later, the law firm found itself sitting inside one of the ugliest corporate autopsies on the British high street, after BHS was sold for £1 to Dominic Chappell’s Retail Acquisitions Limited and collapsed little more than a year later. By the time Parliament finished opening the cupboards, Olswang’s name was attached to generous fees, awkward due diligence, a buyer with “manifold weaknesses” and one exquisite description of what expensive professional advisers should never become.
An “expensive badge of legitimacy”.
That phrase did not come from TCAP.
Parliament supplied it.
Welcome back to Jiten’s Jobs.
Jiten Kotecha And The Olswang Name
Kotecha’s career history records a short Olswang placement in 2010, during the early years of his employment-law career. It was not a permanent stop and, importantly, he had left years before BHS staggered through Olswang’s doors carrying Dominic Chappell, Retail Acquisitions Limited and a business proposition that would eventually occupy Parliamentary committees for months.
That chronology matters because this is not a claim that Kotecha advised on BHS. He didn’t. The BHS transaction came later.
Jiten’s Jobs is following the institutions on the CV.
And Olswang subsequently produced one hell of an institutional case study.
By late 2014, the firm was advising Retail Acquisitions Limited, the vehicle assembled by former bankrupt businessman Dominic Chappell to buy BHS from Sir Philip Green. The British high street institution had thousands of employees, enormous pension liabilities, serious financial problems and a seller desperate to get the thing out of his fucking driveway.
Into this environment walked the advisers.
Expensive suits.
Expensive firms.
Expensive invoices.
And, eventually, a £1 sale.
BHS: Yours For A Quid
On 11 March 2015, Retail Acquisitions Limited bought BHS for £1.
One pound.
A chocolate bar in a railway station costs more.
Of course, buying BHS was not really equivalent to finding a battered wardrobe on Facebook Marketplace. The company came with stores, property interests, employees, suppliers, financing requirements and pension liabilities large enough to turn the purchase price into the least interesting number in the transaction.
By the time of the sale, Parliamentary investigators later found that the BHS pension schemes were almost £350 million short of their liabilities on the relevant funding measure. The later Section 75 deficit, effectively the estimated cost of securing the promised benefits, reached £571 million.
The company itself survived under Retail Acquisitions for just over a year.
BHS entered administration on 25 April 2016.
Around 11,000 jobs were put at risk.
About 20,000 current and future pensioners faced reductions to their expected pension benefits.
A fixture of the British high street had gone from Sir Philip Green to Dominic Chappell for a quid and then into administration in thirteen months.
Parliament understandably developed some questions.
Bring In The Professionals
Olswang and Grant Thornton started working with Retail Acquisitions Limited on the BHS deal in November 2014. Detailed due diligence began in February 2015 after the main principles of the proposed sale had been agreed.
This is where the story becomes considerably more interesting than the familiar cartoon of useless advisers asleep at the wheel.
Because Olswang was not asleep.
According to Parliament’s eventual report, the due diligence material it saw suggested the exercise was detailed and rigorous. Olswang identified significant risks. It warned about financing. It highlighted problems with the pension position. On the proposed £120 million Farallon funding facility, the lawyers were urging RAL directors not to complete until they had maximum commercial comfort.
On pensions, the warning lights were brighter still.
Olswang noted that most of the material pension warranties had disappeared from the sale agreement, increasing the risk to RAL. It also concluded that it could not give the directors material comfort that the proposed Project Thor pension restructuring could actually be implemented.
So the lawyers could apparently see the cliff.
They measured the cliff.
They labelled the cliff.
They produced professional advice concerning the precise dimensions of the fucking cliff.
And the convoy kept moving.
The Buyer Gets Grilled
There is a magnificent little document buried in Parliament’s account of the transaction.
The day before the sale completed, Linklaters had a Know Your Client discussion with Olswang concerning Dominic Chappell. Linklaters’ handwritten record says Olswang had “grilled him hard”.
The notes contain an extraordinary little character sketch.
Open.
Entrepreneur.
Family man.
Stable.
An “honest guy + entrepreneur” appears in the handwritten account.
This is not a formal judicial finding about Chappell’s character, nor is it necessarily a verbatim Olswang report. It is Linklaters’ record of the KYC conversation. However, it provides a wonderful glimpse into the strange social chemistry of big corporate transactions, where reputation passes around the table through introductions, advisers, references and the reassuring presence of expensive firms.
Everybody takes comfort from somebody else.
The lawyers know the accountants are there.
The accountants know the lawyers are there.
The seller sees reputable advisers around the buyer.
Suddenly the room smells more respectable.
Parliament noticed.
Credibility For Hire
Sir Philip Green later relied on the presence of Olswang and Grant Thornton when explaining why Chappell and Retail Acquisitions had appeared credible enough to buy BHS.
The Parliamentary committees were not impressed.
Their report concluded that professional advisers have an important function in transactions, but should not become an “expensive badge of legitimacy” for people who otherwise lack credibility.
That phrase deserves its own fucking frame.
Because there, in five words, is one of the uncomfortable truths about prestigious professional-services firms.
The product is not always merely the advice.
Sometimes the logo itself has value.
A respected law firm sitting beside a buyer changes how the buyer looks. Accountants in the room change the temperature. Familiar City names hanging from the transaction can make something strange start looking institutional.
Nobody needs to issue a certificate reading THIS MAN IS DEFINITELY FINE.
The letterhead can do some of the work.
Olswang Saw The Weaknesses
Parliament’s criticism becomes sharper precisely because it did not conclude that Olswang had simply failed to identify the problems.
The report said Olswang and Grant Thornton became increasingly aware of RAL’s “manifold weaknesses” as the purchaser of BHS.
Yet the committees said the advisers were still content to take generous fees and lend their names and reputations to the transaction.
That is a far more interesting problem than incompetence.
Incompetence is cheap.
This was expertise operating in a room full of warning signs.
Olswang had identified business risks. It had identified pension risks. It had scrutinised financing. It had carried out extensive due diligence. The lawyers understood enough of the transaction to generate warnings in language designed for directors who were supposed to understand the consequences.
Then the deal completed.
BHS belonged to Retail Acquisitions.
The £1 changed hands.
The professional machinery got paid.
Follow The Fees
The money deserves its own table.
Parliament said the engagement terms suggested that Olswang and Grant Thornton together earned around £1.75 million in fees relating to the transaction alone.
More importantly, both advisers stood to receive significantly higher fees if the transaction completed than if it collapsed before the finish line.
Retail Acquisitions itself did not have the resources simply sitting around to settle all of those bills. Parliamentary investigators found email exchanges showing Olswang and Grant Thornton were concerned about how their fees would be paid after completion.
This is where the corporate deal starts developing the atmosphere of a casino approaching closing time.
Everybody can see the risks.
Everybody understands the financing is delicate.
Everyone knows the pension problem is enormous.
Yet there is money on the table if the transaction reaches the other side.
Sir Philip Green later told MPs that Olswang and Grant Thornton had together received at least £8 million from BHS and RAL across their work. That was Green’s evidence rather than a figure independently established by Parliament.
So MPs asked the advisers for the actual total.
They did not get it.
How Much Did Olswang Make?
After BHS collapsed, Parliament wanted to know precisely how much the professionals had earned.
Olswang declined to provide the total.
Legal privilege and client confidentiality entered the room.
The Law Gazette reported that the firm remained tight-lipped about its fees while other advisers disclosed figures. Linklaters, for example, provided Parliament with a breakdown of what it had received for advising the seller.
Olswang did not.
Parliament’s final report went further. It criticised Olswang and Grant Thornton for adopting a very broad interpretation of confidentiality during the inquiry.
The committees recorded that the firms did not provide details of fees earned during RAL’s ownership of BHS. They also criticised the sending of substitute witnesses rather than partners directly involved in the transaction.
In Olswang’s case, the committee said confidentiality was invoked even when MPs sought high-level confirmation about whether the firm had advised on attempted disposals of BHS before administration.
The transaction had gone through.
The retailer had collapsed.
Thousands of workers were staring at unemployment.
Thousands more people had pensions tied to the wreckage.
Parliament wanted answers.
The shutters came down.
Privilege: Corporate Kevlar
Legal professional privilege exists for an extremely important reason. Clients must be able to obtain confidential legal advice without expecting those communications to be casually exposed later.
Nobody needs TCAP pretending otherwise.
But Parliament was not impressed with how the shield was deployed here.
Its report said Olswang and Grant Thornton had “sheltered behind” their confidentiality duties when, in the committees’ view, their own interests and the public interest would have been better served by fuller disclosure.
That is a brutal piece of Parliamentary language because it captures the strange asymmetry of the professional world.
Before the collapse, reputation helps.
After the collapse, confidentiality protects.
When the transaction needs credibility, the prestigious adviser is visible at the table.
When MPs arrive afterwards with a torch, suddenly everybody becomes terribly interested in the curtains.
Lovely business model.
The £1 Receipt
Strip away the hundreds of pages of evidence and the physical object at the centre remains absurdly small.
One pound.
That was the purchase price written beside BHS.
The number makes the transaction sound almost comic until you walk through what came attached to it. Eleven thousand employees. Twenty thousand pensioners. Hundreds of millions in pension liabilities. Stores across Britain. Suppliers. Property. Decades of history.
A pound coin sits beautifully in the palm.
A collapsing department-store chain does not.
The professionals understood that distinction far better than most people ever could. Olswang’s own due diligence identified serious financial and pension risks. This was not somebody buying a mysterious box at auction and discovering afterwards that it contained snakes.
The snakes were in the fucking report.
Thirteen Months Later
Then came administration.
The BHS signs remained hanging above the shops for a while, but the institution behind them was finished. Employees who had spent years beneath fluorescent lights selling clothes, homeware and lighting suddenly discovered that corporate governance is not an academic subject.
It arrives in your wage packet.
It arrives in your pension.
It arrives when the shutters stay down.
Parliament later described a catalogue of failures involving ownership, governance, the sale and the behaviour of those controlling the company. The committees concluded that BHS had been sold to a buyer who was manifestly unsuitable and that the company’s fate had effectively been sealed on the day of the transaction.
Olswang was not the owner.
It did not make RAL’s decision to buy.
Parliament explicitly recognised that the advisers could not be blamed for that decision.
But Parliament still reserved a very particular criticism for the professional ecosystem around the deal.
You can give excellent warnings and still lend your name to the fucking invitation.
The Olswang Lesson
That is what makes Olswang worth a stop in Jiten’s Jobs.
Kotecha passed through the firm years before any of this happened. His short placement belongs to 2010, while the BHS work began in 2014.
Nevertheless, the institution later provided an extraordinary case study in the corporate value of professional reputation.
The lawyers appear to have done serious due diligence.
They found serious risk.
They wrote serious warnings.
They charged serious money.
Then their firm’s prestige became part of the credibility surrounding a buyer whose weaknesses Parliament later described as manifold.
Afterwards, when the Parliamentary inquiry tried to illuminate the entire transaction, Olswang reached for privilege and confidentiality and kept its total fees to itself.
That is not TCAP joining dots.
Parliament drew the fucking picture.
The Badge
The BHS story had billionaires, a former bankrupt buyer, pension deficits, yachts in the headlines, furious MPs, advisers, financiers and thousands of ordinary employees who had no seat at any of the tables where their future was being negotiated.
Yet one of the most useful conclusions was also one of the simplest.
Prestige carries weight.
An expensive law firm’s involvement can make a client look safer, more serious and more credible simply because the law firm is there.
That creates responsibility of its own.
Olswang’s professionals could identify risks in exquisite detail. Parliament even recognised the rigour of their work. What MPs objected to was the larger spectacle of advisers becoming part of the credibility apparatus while collecting generous fees from a transaction involving a buyer whose weaknesses they increasingly understood.
The name was valuable.
The advice was valuable.
The fees were valuable.
BHS?
One pound.
And when the whole fucking thing ended up before Parliament, Olswang acquired a professional-services slogan no marketing department would ever have approved.
The expensive badge of legitimacy.
Lee Thompson – Founder, The Cummins Accountability Project
Sources
- House of Commons – BHS: The Role Of Advisers And Due Diligence
- UK Parliament – Leadership Failures And Personal Greed Led To Collapse Of BHS
- House of Commons – BHS Pension Deficits
- House of Commons Library – BHS Debate And Collapse Background
- Law Gazette – Olswang Tight-Lipped As Two Law Firms Reveal BHS Fees
- Law Gazette – Green ‘Disingenuous’ To Rely On Lawyers In BHS Sale
- UK Parliament – Advisers To Retail Acquisitions Limited Questioned On BHS Purchase