Friday, July 30, 2010

From Ethics to Regulation--Version 2

(Thanks to daniele esposito for computer ethics graphic, especially the Catholic PC)

In the light of my editor's comments--and what power editors are able to wield--I have radically revised my paper "From Ethics to Regulation: The Re-Organization and Re-Professionalization of Large Law Firms in the 21st Century". It is available from SSRN.

It has lost most of the history (which is why version 1 is extant), but has gained in analysis of the moves made by large law firms in today's new regulatory world. What comes out is an interesting result that ultimately benefits them yet it doesn't seem to have been the intended consequence.

After lobbying hard for a new or separate form of regulation for large law firms, they received a tepid response from the reviewers set up by the Law Society. Smedley's review suggested a new division of the Solicitors Regulation Authority that would oversee large law firms. So far the SRA has not yelped with delight about this idea. (Since it was suggested the new regulator would have to be hired from the large law firm sector, he would probably have to be paid more than the head of the SRA. You see what I mean.)

The Hunt Review was similarly not enamoured of the idea and formulated the mantra: unified profession at all costs. But despite that, Hunt introduced the AIR. Authorized Internal Regulation, when one examines it, is a new name for self-regulation with some oversight and occasional audit from the SRA. Given the scale of large law firms, this becomes an extension of their current risk analysis practices, ie. something they are already doing.

So it gives the large law firms what they want without apparently breaching the unity and harmony of the legal profession. Now is everyone happy?

Tuesday, July 27, 2010

After the International Legal Ethics Conference IV at Stanford Law School

(Thanks to Business Ethics)
For me one of the highlights of my participation at ICLEC IV conference was hearing Anthony Davis speak. Anthony is a long-time transplanted English lawyer to New York where he is a partner in Hinshaw & Culbertson. His practice involves advising lawyers on professional responsibility and risk management. Among US lawyers Anthony is one of a rare breed who looks at and thinks about what is happening elsewhere in the world. The Legal Services Act has not escaped his attention. He has commented trenchantly on what it could mean for US lawyers.

In my session Anthony appealed for a new form of regulation for the US legal profession. Instead of a plurality of regulators--bar associations, federal agencies, etc--he called for a single national regulator. It would not be part of government but Congress would have to initiate it. It seems so simple.

He even borrows from the British the idea of a separate or special category of regulator for the large multistate or global law firms. See the Smedley Review.

The American Lawyer has just published his talk which you can read here.

PS. My friend, Julian Webb, has some interesting posts on different parts of the same conference at hEaD space.

Sunday, July 18, 2010

International Legal Ethics Conference IV: The Legal Profession in Times of Turbulence: Day Two

(thanks to Fredrik Sarnblad)

The conference is dense and intense. I don't mean that in a bad way: it is packed with good things and people so there is no let up in talk, listening and questions. All to the good.

Highlights for me have been the discussions on outsourcing. What's clear here is that the idea that is common currency about this is very out of date. The industry is fast moving as David Wilkins showed. The big boys are now moving in: Accenture, KPMG, etc. This will change the landscape and could mean the demise of pure play LPOs. It also signifies we have gone beyond Susskind's predictions. The potential for rationalisation of legal work goes much further up the food chain than he realised.

In-house counsel are proliferating in interesting ways. Michele Beardslee talked about compliance officers in companies and their role is complex and far reaching.

International lawyering is being attacked by American lawyers who are looking for rules and certainty in uncertain cultural contexts. Laurel Terry, Catherine Rogers were accompanied by Stephen Denyer of Allen & Overy brought this home in the areas of international dispute resolution, ethics conumdrums and international practice.

To close we had the contribution of the neuroscientists in law and moral choice. Now this is extending the boundaries of knowledge in potentially unpredictable ways. Just watch the space.

PS. California is still great. Off to San Francisco tomorrow.

Saturday, July 17, 2010

International Legal Ethics Conference IV: The Legal Profession in Times of Turbulence: Day One

(thanks to

We can characterize the debates at the conference as transatlantic warfare. The US is trying to resist the UK invasion of laissez faire into a monopolistic and protectionist legal profession. It's a lost battle.

The president of the ABA gave a keynote address at lunch which while acknowledging the changes in the world, the US wasn't going to change or it would change on its own terms. For those from the UK and Australia this was a forlorn expression of hope in a myth. The myth is that self-regulation exists in an almost pristine form. But as Anthony Davis, a New York attorney, pointed out there are a minimum of 90 regulators of lawyers in one form or another in the US. Myth or deception, who knows? But I would add that this president, Carolyn Lamm, is among the most cosmopolitan of US lawyers but still she recoiled at the idea of lay participation in the regulation of lawyers.

I gave my paper today. It was well-received and we had a healthy discussion in our session, "Ethics Under Pressure: Changing Regulation of Global Law Practice". My colleague, Andy Boon, and I somehow found ourselves on opposite sides of the debate. I only had to come 6,000 miles to find that out.

PS. Stanford and California are terrific!

Tuesday, July 13, 2010

International Legal Ethics Conference IV: The Legal Profession in Times of Turbulence

(Thanks to Josip)
I am off to attend and speak at the International Legal Ethics Conference IV: The Legal Profession in Times of Turbulence at Stanford Law School.

The conference has gathered participants from around the world including the UK, Australia, Croatia, New Zealand, Germany, Japan, Nigeria, as well as the US. We will have a mixture of academics and practitioners, which is always a welcome combination. For me it becomes a field trip and I learn lots.

The above link will take you through to the program, speakers, and more. I hope to provide some commentary during the conference.

Thursday, July 08, 2010

US versus UK Law Firms in Global Merger Deals

(Thanks to Economist)

The UK law firms appear more global than their US counterparts, yet recent data on numbers and values of global merger deals indicates otherwise. (HT to Robert Sawhney)

Reuters has published details of the first half of 2010, and they make interesting reading. Essentially they confirm the historical records of these law firms. There has been little successful challenge to the hegemony of this group over the last 40 years. Quite remarkable endurance.

Here's the table:

Rank  Legal advisor          Value of deals US$m  Mkt share  No. deals
1     Skadden                136,667.8            12.8       82
2     Cleary Gottlieb        111,026.6            10.4       57
3     Wachtell Lipton        93,622.0             8.8        30
4     Simpson Thacher        90,997.7             8.5        76
5     Dewey and LeBoeuf      77,562.5             7.3        34
6     Freshfields            69,213.6             6.5        88
7     Blake Cassels          66,547.1             6.3        63
8     Sullivan and Cromwell  65,770.7             6.2        46
9     Davis Polk             62,454.8             5.9        39
10    Gibson Dunn            62,390.6             5.9        56

Only two non-US law firms appear in the list, Freshfields (UK) at 6, and Blake Cassels (Canada) at 7. And apparently Linklaters comes in at 11. As for Clifford Chance it didn't even figure in the top 25.

While Skadden worked on 82 deals worth $137 billion, Wachtell only needed 30 deals at $94 billion to come third in the list. Given Wachtell's unique billing structure, one can understand how this comes about.

What is clear is how both Skadden and Wachtell have been able to maintain their lead in this area since they created the hostile Mergers and Acquisitions field back in the 1960s and 70s. Moreover, Joe Flom and Marty Lipton took their firms in radically different directions: Skadden went large and global; Wachtell stayed New York based and boutique. Yet in each of their ways the innovations they introduced have let their firms endure and succeed through many economic cycles. More on Skadden and Wachtell here and here.

If I were the managing partner of a Magic Circle law firm, I would be scratching my head furiously wondering how I could break into this market. Now imagine if Freshfields and Davis Polk were to merge (assuming no great conflicts), that really would shake up the positions on the table. Mind you if I hear something along the lines of "The proposed firm merger fell through because of differences in cultures", I think I'll scream. I am becoming more and more convinced this is a cop out.

Tuesday, July 06, 2010

My Stumpy Lamp Post....But Happier...

Since I put up my stumpy lamp post pictures, the one that's had a drastic haircut, there's been some Twitter traffic. What are people doing, you ask? Here's what it looks like now:

Someone suggested I consult Trinny & Susannah (self-styled fashion gurus on British TV, one fat, the other thin, all bases covered). Someone else said: "Mummified lamppost.  I wonder what it's after-life experience will be?" Fair question. So I decided to do something about it.

Here's my attempt:

Thank you to the Romanian Relief charity shop for the styling.

Here is a closer view. As you can see it's a much happier stumpy lamp post now.


Careful What You Ask For...You May Get More Than You Expect...

My local government, Westminster Council, has been active lately, just outside my front door:

I think this is excellent. But their idea of repair is more like the French Revolution's Committee of Public Safety giving Marie Antoinette a new hairstyle.

See what I mean....

I hope I never need to have any faults rectified.

Friday, July 02, 2010

The Legal World on Its Future: The Winmark Looking Glass Report

(Thanks to

There have been a number of reports looking at the future of the legal profession recently (see here and here). This particular one by Winmark* looks at the factors "that are driving the future of [legal] sector from both sides", based on surveys of managing partners (MP), marketing directors (MD) and general counsel (GC).

The ten years up to the Lehman crash are portrayed as golden years for law firms, in profits, remuneration for partners and new lawyers. Since then the landscape is looking bleaker. And new factors such as the Legal Services Act and the introduction of alternative business structures (ABS) are compounding the sense of unease.

The first big indicator of this is the reduction in headcount in firms. 80% of law firms cut support staff levels and 76% cut lawyers. There were further cuts in IT, marketing, and training spends. Yet MPs are searching for stars or teams to lead them into pastures new.

While MPs are trying to boost growth and profits, GCs are looking to shrinking budgets, which is creating a mismatch of expectations. Although GCs seek simplicity and predictability in pricing of legal work, 85% still use hourly billing. Despite much publicity the billable hour is flourishing because purchasers of legal services are unsure what to replace it with whether it be premium billing or value billing. These are as yet incomplete concepts waiting for translation into reality.

One finding, surprising to me, was that GCs don't feel they have the "upper hand" when negotiating price structures with law firms. The introduction of ABSs could alter this perception as more competition enters.

How are these tensions being dealt with? Outsourcing of work is one route which is capturing the attention of GCs. This isn't the legal process outsourcing route but rather the sending of work directly to barristers--"companies' desire for quick, informal cost-effective access to advice". Correspondingly, the Magic Circle law firms have seen a reduction in use by GCs.

Even though client relationship management is the mantra du jour, it is not yet fully worked out by law firms. The report expresses doubt that clients really are at the centre of law firm thinking.

Winmark detail a series of gaps between the expectations of managing partners and general counsel that are going to be filled in interesting ways as the legal market becomes more complex following the shake out of the recession and the introduction of ABS. Expect to see new ways of managing pricing by perhaps pricing specialists and also new modes of work distribution, some of which we are seeing now.

*I'm grateful to Winmark for giving me a copy of their report. Copies can be ordered from