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Wednesday23 July 2014

Revealed: what Austin-Smith Lord owes its staff

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Former employees out of pocket by £850,000

Former staff at stricken architect Austin-Smith Lord are owed more than £850,000 in unpaid wages with the firm admitting staff will only be paid if its client on the Abu Dhabi project at the centre of its financial problems pays its debt in full.

The practice was forced to lay off 70 staff last month after it admitted it was owed £11.3 million on a cultural quarter by the Abu Dhabi Authority for Culture & Heritage (Adach).

The company was saved from going under when it was put into a company voluntary agreement (CVA) – which protects the business from winding-up petitions from creditors – earlier this month. Creditors, including the former employees, were told they would be paid 85% of what was owed to them.

But ASL partner Jennifer Dixon told BD that this figure was dependent on the practice being paid by its Abu Dhabi client. It has already recouped £2.4 million but Dixon added: “Creditors will only get 85p in the pound if the client pays in full.

“If Adach doesn’t pay, [redundant staff] won’t be paid. And the quicker it pays, the quicker the ex-staff will be paid and people will regain their normal lives.”

Minutes of the CVA meeting show ex-staff are owed just over £843,000 but the total will be much higher because the majority of ex-staff didn’t vote on whether to accept the CVA and are therefore not listed in the report.

The published figure of what staff are owed amounts to nearly 15% of the total £5.7 million listed in the report as being owed to all creditors.

Among those employees owed thousands of pounds are former director Norman King, a 35-year veteran at the business who is due nearly £44,000, and associate Darren Andrews, who is owed more than £36,000.

Twelve former staff members voted against the CVA – effectively a vote for the practice to be wound up, though they were heavily outnumbered.

One senior insider said this would have left all creditors substantially worse off but could be interpreted as an indication of their anger towards ASL. “I find their decision extraordinary,” said the source.

The largest creditor is named as Arup’s Middle East arm, Arup Gulf, which is owed nearly £1.4 million.

Consultant Buro Four is due £697,000 while Coe Design Landscape Architecture is owed £515,000. And HMRC is out of pocket by £535,000.

Former ASL partner Richard Pullen, who retired in October last year, is owed £68,735. Pullen is now the non-executive chairman of Wren Insurance, a company which provides professional indemnity insurance for architects and which is owed £161,000. ASL also owes three public relations firms just over £60,000 in total.

Surviving staff who are owed salaries will be paid in full from the practice’s other projects, Dixon promised.

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Readers' comments (11)

  • Surviving staff who are owed salaries will be paid in full from the practice’s other projects, Dixon promised.
    -----------

    So the staff who are still earning a salary will be paid before those who have lost their income?

    Seems a bit unfair.

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  • They won't necessarily be paid first. The point we were making was that former and current staff are being paid from separate pots.

  • Andy Matthews

    Not sure why BD sees fit to name individual staff? Does this add anything?

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  • 2 ASL reports in one day. WOW things must be looking up!

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  • bitter pill

    ARB Code of Conduct
    Standard 4
    Competent management of your business

    You are expected to have effective systems in place to ensure that your practice is run professionally and that projects are regularly monitored and reviewed.

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  • Jeremy Hunter

    Why does this happen so often? Why are there not stricter rules on non-payment from clients?

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  • How do you make a client that has no money pay up?

    You could ask them to take out insurance I guess, to pay out professional fees in the event a project falls over part way through, can you imagine any client agreeing to this, given the number of chancers around?

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  • If a Client has no money, you can't make them pay up, so don't get in so deep in the first place, no matter how tempting huge potential fees may be. Its a lesson most of us have had to learn the hard way on a smaller scale.

    For an organisation as large as ASL it is a gross dereliction of duty of the Partners/Directors to allow things to get so far out of control.

    Who was watching the ball? No-one?

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  • To avoid future fiascos, Hourly rate fee structure and/or up front security deposit refundable upon final payment and/or completion of agreed work.

    Perhaps as part of the applicant's fee on submission of an application to local authority, there is a fee paid to a national trust setup for unpaid architectural employees. They do something similar for unpaid sub-contractors superannuation in NSW Australia (called Plan First)

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  • In my day as a partner of a then fairly major architectural practice, staff were paid before partners/directors. Perhaps these ASL partners should dig into their own private bank accounts & do the right & honest thing: shame on them all otherwise!

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  • This is a short poem I was inspired to write...hope you enjoy.

    Voice of the Unknown Architect

    Come one, come all, to Austin Smith Lord! For riches await us in the U.A.E!
    We only have one project for a cultural quarter, which will be our Barbican until year 2030.

    Our scheme is unique and loved by all! One glimpse at the 1:200 model and you'll see!
    They didn't tell me at the interview, that we will forever be repeating Stages C & D...

    My appetite for the metaphors and etymology you conjectured, were so elegant, overstated and insatiable!
    You expanded to three offices in a 200M radius, and like a fort without a gate- that just isn't defendable.

    We designed. We drew. We modelled and even flew to out to present in abu dhabi!
    We were paid the best rate in London for years! But never voiced our complaints- of which there were plenty.

    When times were good, our pay increased, and the cookies and doughnuts were in their abundance!
    But no one saw the signs...you'd eventually make 30% of us redundant.

    We weathered storm and adjusted the scheme to suite the clients budgets and requirements,
    Some jumped ship, some came on board and a even a few went into retirement.

    One month. Two month. Three month. Four.
    Our salaries reduced like the abu dhabi pearl diving industry in years of yore!

    We saw the cracks and canyons appear in your landscape; our sightlines identified something quite shoddy.
    But we stood by you whilst your borrowing ability reduced, and your cash flow dried up like a Wadi.

    Jennifer and Neil I commend you for your fortitude, with the CVA you've put together.
    Ignore the dim-wits who want you wound-up and locked away forever.

    For that benefits no-one- Not a single creditor!
    Maybe they have less to loose than me? I'm sure Mies would agree here: less is certainly not better.

    To add misery to the situation, the ASL ex-pats in the ab-dab office are procuring and injunction.
    I didn’t realise their greed could surpass yours- even in my wildest imagination.

    This is not the end for you, its just temporary gossip highlighting your flaws.
    Please chase the crown Prince, on my behalf, for the money that's due, for the building that never was.

    Our scheme is on hold, whilst Sadiyat Island progred courtesy of Zaha and Foster,
    I doubt this was the vision of the ASL's Design Director

    I hope you do extract as many millions as you can, locked away in the Emirati sands.
    And please find the mole who's leaking to The BD and beat them with your bare hands!

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