At the time of writing this article I am pleased to confirm that the world has not ended.
It is an important point to make; I would not want to waste my time if it had ended. I will also be an optimist and assume, for now, that the world will not have ended by the time you read these words.
Yet to listen to the constant reporting of the banking crisis in the press, on television, on the radio and across the internet, one would assume that the world was close to imploding. A pinstriped induced Armageddon
Okay…clearly it is a weird time.
A time when The United States government can find $700bn (that’s seven…hundred…billion…dollars) to underwrite so called “toxic” loans yet continue to fail miserably to look after its own most vulnerable citizens who cannot access even basic healthcare.
A time when banks that have existed for 150 years, that employ tens of thousands of people and have millions of customers can merge literally overnight, yet tax payers have paid billions of euros a year, for years, to keep bureaucrats in Brussels regulating deals and preventing mergers taking place that do not fit their competition policies
A time when world leaders can posture about wars they fight in far away countries that harbour radicalised young men and women, but where a few people much closer to home, radicalised by greed, can cripple nations without a bullet or a bomb in sight.
The crisis in banking will be remembered for many things, but not the end of the world. The crisis in banking will be remembered, I hope, as the time ordinary citizens saw their leaders in a different light and began to demand a different type of leadership.
Could we see elected politicians who recognise that they are in power to serve their fellow citizens? Not Government for protected interests, not for globalising business executives, not for self-serving self-perpetuating governmental institutions.
When one government can bail out Wall Street at a cost of $700bn, no government will ever again be able to say they cannot afford to look after the poor, the sick and the infirm and be believed…It is just a question of relative priority and, crucially, of ethics.
When your local hospital is threatened with closure, politicians used to say that restructuring local healthcare means hard decisions have to be taken…will this be acceptable now? When natural disasters strike, world leaders used to authorise limited aid and rely on charities to take up the demand…will this be acceptable now? When politicians buy arms instead of HIV drugs…will this be acceptable now?
How much good would $700bn do in our world if it wasn’t spent on bankers?
And because it is a question of priorities and ethics, let’s see our lawyers step up to the mark and be counted.
The legal press in recent weeks has reported the credit crunch in one of two ways – how many lawyers are losing their jobs in big city firms…and conversely, what firms are working on the mega deals as banking institutions and governments restructure the banking sector. As an exercise in journalistic merit, it lacks any insight and is entirely facile.
I believe the challenge and opportunity for the legal profession is much, much greater; it is nothing less than to be part of the informal regulatory regime for capitalism.
In future in-house legal teams should consider it to be part of their brief to actively manage reputational risk, to be the keeper of the corporate conscience, to place constraints on sales targets that compromise appropriate risk taking.
In conversation many in-house lawyers would say they already consider this to be part of their role in any event, but in the light of the humiliation of banks around the world, this must now become a practical reality, not just nice words in theory.
I wonder if individual shareholders might even start to look at in-house lawyers and put on them a specific duty to look after their interests…Perhaps this simply makes explicit that which is already the case.
And for law firms instructed by their major corporate clients, a duty perhaps to advise on the context as well as the detail. In future when deals are proposed, it shouldn’t be enough for lawyers to say that it “can be done”, perhaps now a responsibility to say if it “should be done”. And again shareholders holding advisers to account…no good to say “yes, it was legal”; the question will be “but was it also the right thing to do?”
It sounds vague, difficult and potentially dangerous, but lawyers have always put themselves in positions to challenge overbearing and dominant forces, whether state or business, to represent the best interests of those without the same resources to protect themselves.
Those minority interests – be they employees, consumers or citizen tax payers now need the legal profession to assert and uphold ethical business practices.
Not all lawyers will relish the challenge, but if the world of business is going to progress from the utter folly and mess made by our bankers, it will not be iron fisted government appointed regulators who make it happen (after all until now they were part of the problem, not the solution); it will be trusted advisors, close to the deals, close to the decision makers, who can guide, influence and cajole appropriate behaviours and appropriate risk taking.
For many years I have encouraged lawyers to be more business like in their approach – adaptable to change, embracing of new technologies etc, etc, but I am a passionate believer in the vocational imperative of what being a lawyer means.
Lawyers must now step up and be players in this new world; not just facilitators, not just clever wordsmiths, not just attack dogs for executive talent, but independently minded guardians of what is acceptable business practice.
…May be, after all, some good will come of all this nonsense…