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Editor's Letter

posted 22 Jun 2009 in Volume 3 Issue 5

Welcome to the June/July issue of FD Legal.

   On your marks, get set… GO! Professional indemnity renewal season is about to begin. Have you started your applications? If not, you’d better get your skates on – because if you thought last year was bad, this year’s gonna be a doozy. Get in there early or risk taking a dip in the assigned risk pool (ARP). Prepare to be questioned, poked and prodded; and when going for ‘transparency’ think ‘the invisible man’…

   And if transparency weren’t enough to leave the profession feeling rather naked and vulnerable, misconduct complaints against solicitors can now be published in full. Oh dear. And in whose hands does the decision to be published lie? The complainant…

   The start of renewal season also heralds the official start of summer, with wet weather and tube strikes galore. And with the UK government having finally turned into its Spitting Image counterparts, ‘unreservedly apologising’ seems to be the latest ‘get out of jail free’ card. If I unreservedly apologised for not having bothered to find any articles to fill these pages, then asked you to still pay for an empty issue, would you, the readers, be as forgiving as the government? Somehow, I think not… and rightly so.

   2008-2009 yearly results are also starting to trickle through, with CMS Cameron McKenna seeing profits down 14 per cent with a two per cent rise in turnover. Dentons report a 36 per cent drop in profits, but with a three per cent rise in fee income, and Herbert Smith announced a five per cent increase in turnover with prediction of a fall in profits per equity partner (PEP). With others predicting similar results, the trend seems to be for dropping PEP and a small increase in turnover. There is much speculation, however, that upcoming results will show drops in turnover, maybe even in the Magic Circle. So we’ll wait to see what others hold before reflecting on the havoc wreaked by the past year.

   On a positive note, ‘green shoots’ are being seen by one and all. But while lights, tunnels, shoots and upturns are definitely preferable to looming doom and gloom, I can’t help but feel a little wary upon reading the words of my favourite economic soothsayer, Nouriel Roubini (aka Dr Doom) when he proclaims: “Green shoots or yellow weeds?”1

   As the man who predicted the current recession back in 2006 (to most people’s amusement – and my how the bankers laughed in September 2008…), he’s been pretty spot on when it comes to the events of the past year. And his views on the current green shoots are akin to weed killer.

   So are we all suffering from a case of premature expectation? According to Roubini we are. But today the National Institute of Economic and Social Research (NIESR) announced that the UK economy hit rock bottom in March. With gross domestic product having expanded at a monthly rate of 0.2 per cent in April and 0.1 per cent in May, and with the housing market seemingly turning a corner, there is definitely hope in the air. Whether it is ‘false’ hope remains to be seen and I’m crossing my fingers that, for once, Roubini might have got it wrong.

   I would like to thank all those who have helped me with this issue of FD Legal, and, as always, if there are any issues you would like to see covered or if you wish to contribute please do get in touch. Any feedback would also be very gratefully received.

Joanna Lee

Editor