John Lanchester in the London Review of Books said:
"So: a huge unregulated boom in which almost all the upside went directly into private hands, followed by a gigantic bust in which the losses were socialised." (October 2008)Joseph Stiglitz also criticized Obama's plan in the New York Times to buy toxic assets for producing the same results as Lanchester's diagnosis. Thus the financialization of daily life and the overproduction of capital have shifted the dynamics of life in ways we were not predicting.
This came to mind when I received an invitation to a workshop by ephemera: theory & politics in organization which is organizing a workshop on the business school and the financial crisis. One claim alleged is that poor business education is in part responsible for our present circumstances. Could the same be said of legal education?
Consider, for example, the editors' blog at the Harvard Business Review, "The Economy: Let's Blame the Lawyers", the gist of which is that lawyers will do all right because (a) they are hated less than bankers, and (b) someone has to sort out and profit from this mess.
One interesting illustration of this thinking is the story of the move by derivatives maven, Dan Cunningham, from Allen & Overy's New York office to Quinn Emanuel, the litigation firm. Cunningham is known for his expertise in structured products and his very close connection with the International Swaps and Derivatives Association (ISDA). When he moved from Cravath in 2001, it was considered a coup for a British firm to recruit someone of his calibre. Now the bottom has dropped out of his particular market niche, the litigators have realised where he can make a direct contribution to their work, even though he is no litigator. Someone has to tell the litigators what these structured products and derivatives are.
Can we see Dan's move as a sign that lawyers are going to come out ahead in these messy times? Unfortunately, I suspect that is going to be an over-optimistic reading of the runes.
Lawyers will not escape culpability for their role in the financial meltdown no matter how much they try to portray themselves as victims. Their role was significant: they enabled these deals to work by creating the documentation that gave the deals legal reality, their legitimation. Each transaction can be perceived as a symbolic universe in which order since this universe is "the matrix of all socially objectivated and subjectively real meanings" (Berger & Luckmann, The Social Construction of Reality 89). Without the lawyers' input the transactions would have been meaningless. As I have suggested before, there is something jesuitical about the lawyer's role.
Of course with all the scorn piled on the bankers there is a tendency to view the lawyer as a kind of underlabourer who merely carried out the tasks assigned. But this is too simplistic a reading. The lawyers were key participants and because of their professional obligations they were supposed to bring a professional ethos, an ethic, to the work. It appears they didn't.
The law firms will soon be in the firing line for their contribution and will be the recipients of writs and lawsuits. It seems the lessons of Enron were not well learned.
But look on the bright side. As teachers of legal ethics, we shall have a wonderful bounty of case studies to pore over and commune with our students about in years to come. Articles will be written and more. With luck legal education may come to respond to what has happened this time and reinforce ethical principles and thinking.
Sadly I see no sign of this occuring in British legal education which leaves ethical training until the last possible moment and at best gives it scant attention. I along with some other sociolegal researchers are now composing our grant application to study ethics in large law firms. I hope the profession responds well to our research. It should do as there are good people in the legal profession who still retain the spirit of professionalism.