(Thanks to Jim Guckin)
Optima Legal set itself up to offer property and litigation services to the UK lending market. According to The Lawyer it went one step further than most other law firms and this raised trouble with the Solicitors Regulation Authority (SRA).
Optima borrowed heavily (£35m) from Capita in 2006, the outsourcing company, to fund a buyout of a volume arm of Dickinson Dees. Optima then outsourced its back office services to Capita which also took share options for when alternative business structures would be allowed (October 2011).
The SRA didn't like this and following a three-year investigation--starting in 2007: why did it take so long?--it reprimanded Optima for jumping the regulatory gun. Everything had to be put back as it was before the deal, including the 234 back office staff currently employed by Capita. The share options had to be cancelled too. Apparently Optima had taken counel's advice on the move.
Come October 2011 it can all be changed around again. What a roundabout!
Do read the comments to the story as they represent the polar opposites of views. Some, eg. Peter Rouse, ask, "Did services suffer? No, then what's the problem?" Others accuse Optima of hubris. The comment by Tony Guise raises the pertinent question of whether in fact borrowing money was wrong and that the SRA has overlooked the commercial realities of legal life.
I bet in the run-up to ABS this is going to get worse. Poor SRA...