I Want it All

Ah Christmas. My daughter is grown up now (mostly) but I remember when she was much younger and the conversations we would have in the run up to Christmas about choice - which of the many presents she had mentioned did she actually want. Inevitably, at some point, she would say, "But I want then all!".

I was reminded of this when reading the words of Lord Justice Gross, as reported in Legal Futures (link here), I quote:

"I am anxious to ensure that a conflict between shareholder value or business interest on the one hand and professional ethics should always be resolved in favour of the latter – and the point is worth making because the pressures to the contrary can arise in subtle form through small, imperceptible steps..."

I appreciate his concerns. In another part of his speech, he says:

“Money is in short supply; that is a reality. There are many priorities and supplicants for public funds. That too is understood. However, reducing cost – in the sense of tightening the legal aid budget – must, over time, impact on the willingness of the best and brightest to practise at the publicly funded Bar. What will this do to the quality of our justice system over time, in areas such as crime and family?”

This seems to be axiomatically true. It does, however, also smack a little of wanting it all. The Bar - the Justice system - should be well funded, firms and sets should be careful in cutting costs and outside investors should not have influence over the firms they invest in.

That doesn't sound quite right to me. Why would an investor provide a large slice of capital to a firm but have no control over its direction? Why shouldn't firms cut costs sensibly? Perhaps most importantly - why should external investors in a law firm have any lower ethical standard than the lawyers who currently invest (in one way or another) in the firm? It is possible, surely, that an additional external oversight might actually work to keep some firms on the straight and narrow.

We can't have it all. In times of economic difficulty, criminal justice will be asked to cut costs. Law firms and chambers should work to ensure that their systems are as efficient as possible and so make the best use of the money available. Firms should look to external investment expertise - and accept the requirements placed on them by the investors in terms of reporting and control systems. Who knows, we might end up in an ethically, as well as financially, stronger position...

The Ethical Stance

Isn't it good to be able to report that lawyers are taking an ethical position and fighting, in the courts and pro bono (mostly) for something that they believe in?

The case of Paul Chambers has been reported in many parts of the media. It is a shocking case of over-reaction, incompetence from the CPS, rushed advice to a client and an apparently heavy-handed judge. For those of you unaware of Paul, her was the "Twitter joker' - the case is outlined by the Guardian here. Mr. Chambers was undoubtedly silly - but I suspect that many of us have felt the same way he did, even if we have restrained ourselves from voicing our frustration so publicly.

What I find heartening is the number of lawyers who feel so strongly about this nonsense that they will work, generally for free, to secure Paul's release. "The Lawyer" details the list of those engaged in the project here. I think they should all be congratulated publicly. This is a tremendous demonstration that lawyer are not (all)  money-grabbing, self-centred leaches and that they understand when a law or the application of a law is just plain wrong - and are then willing to do something about it.

Thank you: David Green, Stephen Ferguson, Andrew Sharpe, Tom Cassels, Ted Mercer, Robert Dougans and Joanne Casg - and all the others.

Fault, responsibility and strategy - or none of the above...

Dear oh dear - what a mess.

Ian Austin, the former Managing Partner and Executive Chairman of Halliwells, has been talking to "The Lawyer" (see here for their story) - or rather he has been giving his version of their descent into administration. It turns out that it was the partners' fault, or the external consultants, or the boards' or... someone else's decision or fault. I quote one example from Mr. Austin:

the decision to move into Spinningfields was a decision taken by a board, by external consultants [Sheppard Robson] in conjunction with group heads. This was not a decision of my own making..

What? He was the Managing Partner - his is the responsibility, whether or not it was his fault. He is also quoted as saying that the loss of the insurance team in December last year was the "straw that broke the camel's back". One of the comments on the story points out that his firm was still recruiting & promoting 6 months later.  In a limited company or a PLC surely this would be "trading insolvently"...?

I suppose I should be more shocked at the lack of responsibility that is shown here and at the lack of strategic thinking that allowed the firm to distribute £15million to the equity partners in 2008 (keeping  a whole £5million for investment in the future - well in the firm's future). Mr. Austin's excuse/justification for this seems to be along the lines of "the money was there and we wanted it" or "at the time everything looked rosy". On a much larger scale this is like saying "I didn't need an umbrella - it wasn't raining yesterday. It's not my fault I got soaked". I'm not sure this even qualifies as short term planning.

As I said in a previous blog (see here), one of the most shocking aspects of the Halliwells debacle is that the equity partners walked into new jobs - the very people responsible for the mess are those least affected by it. Mr. Austin himself negotiated his own safe transfer from the sinking ship before the deal on Halliwells' assets was completed - an action he justifies as being "...the right thing for me."

That last phrase sums up the state of management and ethical behaviour in Halliwells - the equity partners removed £15million of cash from the firm 18 months before it went bust because they wanted it; the same people walked into new roles, leaving trainees and junior staff to their fate, because they could and it was the best thing for them. With that level of strategic thinking and personal thinking rather than firm thinking, my only wonder is that it took them so long to go bust. I'm sure Manches are heaving a huge sigh of relief that they didn't merge (or buy) with Halliwells in 2009.

Lessons for Business

The expenses saga continues with our politicians, and seems to get worse at every step. Are there lessons for businesses in this sorry tale? Yes, I believe there are - but they are quite simple, straight forward lessons which I would hope that everyone knows. Sadly, the MPs' story seems to suggest that, once again, the bleeding obvious does need to be stated.

Lesson 1: Ethical standards rather than complex rules.

If you do not believe that the people who work with and for you have high ethical standards, there is no point in setting up complex rules to try to control them. Standards and principles work,in my opinion, although it may not be obvious why. There is often a delight in writing new rules to cover new situations. The difficulty with specific rules is that, if there are many of them, the lesson for staff can be "if there is no rule against it, then you can do it". By having a simple principle such as "Behave responsibly" or "Act in the best interest of the client" there is enough vagueness to persuade staff to err on the side of caution. 

I worked with one organisation which moved from a set of reasonably well understood financial principles to a 60 page set of financial regulations. Financial efficiency went downhill - partly through the complexity of the rules and partly because of the "work to the rules and only the rules" way of working.

Lesson 2: If you have done wrong - admit it and go immediately

We can all make mistakes. If a member of staff - no matter how senior - has "made a mistake with their expenses" for example, they should admit the error and then resign. This may sound as if the punishment is more serious than the "crime", however the alternative is to say "it's ok to fake some of your expenses so long as you are an important employee and we don't think it's too serious". To me this sounds rather like tempting staff to take a chance. Zero tolerance has the advantage of being easy to understand.

I worked in a hotel company which had a published zero tolerance for drinking on duty. Every member of staff knew about the rule but we didn't think it was that serious. One Saturday evening the General Manager was acting as Duty Manager, and late one night was standing at the bar drinking a small glass of beer. The Area Manager happened to visit, saw the GM drinking and fired him on the spot. We had no problem convincing staff that the rule was serious after that.

Lesson 3: Transparency is easier

The more things are kept private and secret, the more people are convinced that the reason for the secrecy is because they are being disadvantaged.

Staff expenses should be available throughout a firm (and to the shareholders or partners depending on the structure) - this leads to better behaviour from everyone since they will not only need to justify their expenses to their line manager, but to the firm as a whole. Why should anyone be ashamed of legitimate expenses? The same can be applied to most expenditure. Even salaries can be published by way of salary bands - it works in the UK Civil Service, so why not everywhere.

By considering lessons for our own workplaces, perhaps some good can come out of the mess that our MPs have made of theirs.

Doing the Right Thing

Well really. I go away for a week's holiday with no access to the internet, email or much in the way of news, and on my return, I find that the wheels have come off British politics and the impression is that the whole system of politician's allowances and expenses is corrupt.

I've spent this morning catching up, reading through all the sources I can find to see what the real story is. So far as I can see the main explanation/excuse being offered is "I was following the rules".  This seems to me to be missing the point. The point is not what you can claim for - but what you should claim for. Let me give you an example.

As a line manager, I decide that the team are a little down and that a night out would be the very thing. I take them to the local pub for a couple of hours followed by a meal out. What should be claimed for? Well, let's look at this one thing at a time. The drinks - is there a budget? Has the expenditure been cleared by my line manager? Most importantly, however, is - who is taking who for a drink? Is this me taking the team out or the firm taking the team out? In my opinion, in most circumstances, it is and should be me taking the team out. No question. The gift of an evening out has more value if it comes as a personal gift rather than a corporate gift. 

So then - the meal. A number of those out for drinks are able to come along for a meal too - but no everyone. Again, then. What should be claimed? Again - it is a personal gift and a personal expense. 

Many politicians do not seem to have the same opinion. A good number of them seem to be of the opinion that they should claim for every penny that they can. Look at some of the items on the list: a home cinema, cleaning a moat, furniture, interest for a mortgage that has been paid off. Those that have made these sort of claims - no matter that the "rules" appear to allow them - have become confused about what they need for the purpose of their work and what they might want for personal satisfaction or gratification. In my opinion, this is a dreadful lapse in ethical behaviour. 

I don't believe that any person who is of the opinion that the allowance and expenses system is there to provide as much money as possible will make a good MP. I am certain that I would prefer to  be represented by someone with a better understanding of ethics.

This debacle can have a lesson for business. The simplest way to regulate MP's expenses, in my opinion, would be to have some simple principles (expenses must be for the least possible amount, for the sole purpose of MP's business and supported by receipts) and then publish everything. Not just expense - all earnings. The same should apply in business. I can't think of any reason that expenses should be private. Salary, yes, but not expenses. If it is really a business expense then the firm should know about it.

The simplest systems are usually the best. The most open and transparent are usually the most fair.