Recessions always have a long tail for professional services businesses. And as competitors pick over the carcass of Halliwells, the downturn’s biggest casualty yet in the legal sector, there is great anxiety among industry observers. Is this the thin end of what may turn out to be a very thick wedge?

Well, not so fast. A very significant contributor to the firm’s woes was sky-high property costs – that much has been admitted. The firm relocated, reportedly at great expense, into a flagship building in Manchester’s Spinningfields business district, at a whopping rent understood to exceed £5m a year. Halliwells was paid a hefty reverse premium to take on the lease of the new premises; the bulk of which was paid out, perfectly legitimately, to the equity partners. The firm was then run on debt which, combined with the cashflow difficulties brought on by a savage recession, dealt Halliwells a fatal double-whammy.

It would be unwise, therefore, to draw too many general conclusions from an unfortunate development which has very particular characteristics. But there may be wide-ranging repercussions nevertheless. With Royal Bank of Scotland in the hole for as much as £20m, is this going to make banks even more cautious of lending to partnerships – and particularly LLPs?