Anthony Hilton: Why their profession’s failures mean lawyers don’t win top City jobs

To think of a lawyer is to think of someone who is comfortably off. It kind of goes with the territory.

The public perception of the profession is that in the biggest firms, known as the Magic Circle, the partners make a small fortune — admittedly, they work for it — while in the mid-sized London companies and down to the larger practices in the smaller towns, life is still not at all bad.

But the reality is rather different. The travails of the largest firms have been well-known as they have struggled, albeit with qualified success, to match their inflated overheads with the sharp drop in deal flow that has been the pattern of City life in recent years. But they are the privileged few.

The real squeeze is in the layer below, and currently the London profession is watching in morbid fascination the death throes of two of its better-known mid-sized firms as they struggle to come to terms with the realisation that their business model no longer works.

Both are in a kind of zombie state — still going through the motions but without any prospect of escaping a relentless financial squeeze. They are trapped in a nether world in which the incomes of the older partners are shrinking while the young and talented try their luck elsewhere.

Both have thought about mergers but what’s on offer is likely to compound rather than solve their difficulties because most of the candidates have similar problems, and those that haven’t want the lion’s share of the business.

So they drift on in limbo, hoping something will turn up, with that faded gentility you find in once-grand seaside hotels. Law firms can and do go bust — but they like to do so discreetly. It remains to be seen whether this is a privilege that will be available to the current strugglers.

The senior partner of one of the more dynamic firms in the mid-tier has a theory about how this has come about. One hundred years ago, he says, the solicitor was the trusted adviser — the consigliere, to borrow a phrase from The Godfather — to businessmen, aristocrats, politicians. The lawyer was their first call in times of difficulty, the one they all turned to when it mattered. And as custodian of their deepest secrets, as a safe harbour for their worst fears, he was appropriately rewarded.

In the intervening century, however, the lawyers have allowed themselves to be pushed further and further down the food chain, and away from the seat of power. In today’s commercial world, when there is a deal to be done it is picked over by investment bankers, brokers and public relations consultants — all of whom have a share of the ear of the chief executive. Then when all the high-level stuff has been sorted by these experts, the package is tossed to the lawyer with instructions to sort it out and make it presentable.

Lawyers have botched the transition from being a profession to being a business in a way the accountants have not. In going for volume, lawyers have lost the glamour, the access and the special status that came with having opinions worth listening to.

They have allowed themselves to be commoditised and to become the last port of call. They have allowed some of their best brains to move in-house as general counsel in the biggest companies, taking the interesting legal advisory work with them. They live in a world where, in many cases, competition between firms comes down to who will do it cheapest.

That inevitably means a slow death for those who have not got the efficiency, can’t adopt the technology and who, in their hearts, don’t really believe that is what the law should be about.

In contrast, while the accountants have certainly lost some status in their headlong dash for growth — and deservedly so in their unseemly desire each to be bigger than everyone else — they have nevertheless held on to most of it. More to the point, they have managed to reinvent themselves. They are now no longer “just the scorers” — they are recognised as business advisers.

You see the results in what happens when senior partners retire. On the accountancy side, they almost always end up as chairman of a FTSE 100 company. Colin, now Lord, Sharman picked up Aviva after KPMG; John Griffith-Jones, an alumnus of the same firm, chairs the Financial Conduct Authority — for the moment anyway. Sir Mike Rake, another from KPMG, has cropped up all over the place — BT, president of the CBI, Barclays, easyJet — even as a governor of his old school, Wellington College.

It is a similar story with the former bosses of Deloitte, Ernst & Young and PricewaterhouseCoopers. Indeed, within days of leaving PwC in July, former senior partner Ian Powell was named as chairman of Capita.

Contrast this with what happens to senior lawyers. Few of them are offered any board appointments anywhere, let alone in the FTSE 100. Headhunters say chairmen strike them off shortlists because they are “just lawyers” — by implication having little understanding of business. It may not be true but in today’s post factual world, it is a narrative that suggests many legal firms will continue to struggle.