ANDREW NULTY decided this year that not enough people were aware of his glittering achievements. In only five years he had set up a law firm in a provincial backwater and turned it into such a money-spinning triumph that at the age of 39 he had a multimillion-pound fortune.
It was merely the latest success story for a charismatic individual whose colourful CV suggests that he has always been something of a young man in a hurry. By his mid-twenties, the rugby-playing, motorbike-riding Mr Nulty was already a former fashion model and a former television presenter.
After qualifiying as a solicitor, he joined a Manchester law firm in 1996 and was soon made a partner and head of litigation.
He set up Avalon Solicitors in 2001, taking with him 2,000 personal injury clients from his former law firm and citing his formula for success as “a blend of common sense, hard work and a down-to-earth approach”. The plan worked, at first steadily and then spectacularly. Last autumn Avalon, based in Warrington, Cheshire — and by now specialising in industrial injury compensation claims — recorded a turnover of £5 million.
A year later the firm’s turnover had risen to £21.2 million and its profit margin was a phenomenal 73 per cent, which meant that Avalon’s two equity partners had earned between them £15.5 million in 12 months. As Avalon’s senior and founding partner, Mr Nulty’s share of the profits was an estimated £13 million.
Every year The Lawyer magazine produces a list of the top 100 British law firms, ranked by turnover. During the early summer, the publication received a telephone call from Avalon’s managing partner, Anthony Chorlton, suggesting that his firm merited consideration for this year’s list. The figures stacked up. Avalon was not only ranked 88th, by turnover, but Mr Nulty’s personal profits had earned him, for 2005-06, the title of highest-earning solicitor in the country.
In an interview with The Lawyer, Mr Nulty explained that after five years of “keeping our heads under the parapet” Avalon had decided “the time was now right to start telling people who we are and what we do”. When The Lawyer published its top 100 list in August, Mr Nulty’s £13 million bounty shared centre stage with the news that his firm was under investigation over numerous alleged breaches of Law Society regulations.
Avalon denies any wrongdoing, but its senior partner has begun to shun the public spotlight. His firm, which has been charged with 12 separate offences governing solicitors’ practice rules, accounts rules and professional conduct, will fight its corner at a hearing of the Solicitors Disciplinary Tribunal next year.
One legal observer said that the long list of allegations was “the closest I have seen to having the book thrown at someone”. The bulk of Avalon’s turnover last year, 68 per cent or £14.4 million, was paid by the Government in the form of legal fees for handling thousands of damages claims by sick miners or their families.
Several law firms earned multimillion-pound profits from the £7.5 billion coal health compensation scheme, which was set up for men who developed chronic chest conditions. The Times has disclosed a number of examples of how the system was exploited by some solicitors and trade unions at the expense of the claimants.
Many cases involved solicitors whose greed led them to slice money from their clients’ damages in addition to fees they were paid by the Government. The articles led to a criminal inquiry by the Serious Fraud Office and an independent inquiry into the Department of Trade and Industry’s running of the scheme.
More than 40 solicitors’ firms, including Avalon, have also come under investigation by the Law Society, which has led to more than a dozen practices facing disciplinary proceedings. In the case of Avalon, The Times can disclose that the alleged rule-breaking — strongly denied by the firm — was on a grand scale.
Rule 1 of the Solicitors’ Practice Rules sets out the six basic principles of the profession. Mr Nulty is alleged to have broken four of them, including the solicitor’s duty to act in the best interests of his client.
The Law Society alleges that between 2001 and 2003 the firm’s clients were initially told in writing that their claim would not cost them a penny (it would be done on a fixed-fee basis), but received a subsequent letter announcing that there had been “a mistake” and that Avalon would actually be charging a success fee if damages were awarded.
The Law Society says that in some cases clients were charged 15 per cent of the law firm’s costs in conducting the claim, but in others they were asked for a “contribution” amounting to 15 per cent of their final damages.
It is alleged that by June 2004 Avalon had deducted fees totalling £262,000 from individual compensation awards. The firm says that it later paid back all the money.
Mr Nulty is also accused of misleading the Government in a letter of March 2004, which suggested that Avalon relied solely on the fees it received from the DTI and that its claimants received 100 per cent of their damages.
In addition, Avalon is accused of failing to provide its clients with appropriate or accurate cost estimates and client care information.
One particular case highlighted by the Law Society investigation concerns a woman who was told by the firm in October 2001 that it was going to deduct 15 per cent of her damages due to “changes in the law”. The society says there had been no change in the law. The Times understands that Avalon may also be forced to defend its relationship with a claims-handling company, Sureclaim Ltd, which was run by Mr Nulty’s younger brother, Martin.
Solicitors representing Avalon told The Times yesterday that there were “a number of material factual inaccuracies” in the allegations, but declined to say what they were.
