Not guilty

It was not quite the G20, but a high-profile group of 12 legal industry experts met for dinner in the City in March with a view to identifying some of the causes of the financial crisis and considering how to deal with its effects. Gathered for the Legal Business round table on managing business and risk in the downturn, the delegates emerged a number of hours later having debated topics ranging from regulation in the City to the inadequacies of the law firm partnership model.

One of the most vigorously debated topics is whether or not the legal profession could be judged to share culpability in relation to the financial crisis. That bankers were involved is clear, but there was also a lawyer on every deal table and behind every collateralised debt obligation and securitisation. Whether this might imply that the legal profession has any sort of culpability is a point that splits the group straight down the middle.

Jane Hunter, a senior risk consultant at Bird & Bird, labels as ‘preposterous’ the idea that blame for the crisis could stretch as far as the legal profession. ‘Of course lawyers have to be included in the blame game if you are going to pile everyone in. But then it becomes quite preposterous,’ she insists. Others are not so sure but, by and large, the representatives from large City firms think that the credit ratings agencies and regulators probably deserve to be ahead of lawyers in the queue.

‘If you are looking at the causes of the crisis and whether lawyers were involved then yes, of course we were there, along with a lot of other people, because we drafted the documents and did the due diligence,’ Lovells’ general counsel Michael Seymour acknowledges. ‘But was it really the lawyer’s role to be able to spot that the whole Western banking system is about to collapse?’ he queries with disbelief.

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