It wasn’t so long ago that law firm risk teams fought an endless, fruitless battle to get partners and senior management to pay much attention. Traditionally, compliance has been anathema to senior lawyers, who see the box-ticking hordes from their risk teams as an expensive encumbrance to client work. Well, it is pretty boring… until, of course, it isn’t.
The worlds of business, politics and sport have since the 1970s fallen increasingly under the spell of the star individual and law has been anything but an exception. As partnership mitigates the heaviest excesses of the winner-takes-all compensation cultures seen in banking, sports and plc management, in law the star culture has manifested to a considerable extent via the partner recruitment market.
On 1 April the Financial Services Authority (FSA) was replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). What are the implications for firms’ financial services practices?
It’s a sobering sign of what we’ve been reduced to when we’re praising firms for doing the obvious. This time it’s the pioneering technique of holding a little cash back to cover investment, working capital and future partner drawings, rather than doling it all out to equity partners almost as soon as it comes through the door.
Field Fisher Waterhouse (FFW) and Dentons are the latest proponents of the dark art of prudence – FFW confirming it would hold back its ‘special’ profit distribution in March, while Dentons has delayed some payments over the last 18 months from the 2011/12 financial year.
A few years ago – during what in retrospect turned out to be a boom – you knew where you stood with City law. The market kept growing and, while the man in the street associated lawyers with courts and disputes, those in the industry knew success came from the other side of the equation. In short, you made the real money from deal-doing and associated disciplines, not the contentious side of practice.
Remember convergence? In the 1990s’ tech boom the concept was all the rage. It was the simple idea that rapidly-advancing communications would see once-discrete platforms and information systems like TV, the printed word and telephones merge and dynamically share data in an economically seismic fashion.
What happened next says a lot about human nature, business and the whimsy of prediction. The internet bubble burst and such utopian visions were suddenly crazy. One received wisdom replaced another. Except convergence was one of the most accurate forecasts ever made about industry – it just took technology another three years to catch up with the hype. The fundamentals prevailed.
In this month’s Global London special we track the fortunes of the leading international advisers in the City. But are foreign players making progress?
There’s nothing like a bit of schadenfreude when matters go awry and the collapse of Cobbetts as an independent entity has proved no exception. Since it was confirmed that the firm was to become the first major UK practice to fail since the 2010 break-up of its local rival Halliwells, plenty have claimed the end was inevitable and a direct result of over-reach.
Tony Angel and the cute teddy bear next to him greeted me as I found my new desk – a Legal Business cover from 2003 and a personal favourite, a brilliant dissection of Linklaters’ painful reinvention as metric-driven world-beater. I soon dug out other classics, including the 2009 Icarus-themed investigation into pre-collapse Halliwells and the crumpled Hammonds cigarette packet illustrating a 2005 piece on the national player’s strained finances.
With Cobbetts entering into administration, are we likely to see more law firms in trouble this year? Why?/Why not?