Facing the crunch?
29/10/2008
In light of the appointment of Peter Kurer as Chairman of UBS earlier this year, Tony Seymour questions whether the current economic climate has offered in-house lawyers a real opportunity of proving their worth in a time of crisis.
The events of the past couple of weeks have no doubt had many in-house lawyers concerned about their future, especially those at the beleaguered financial giants such as Lehmann Brothers, Merrill Lynch and UBS. However, one could argue that these troubled times have given lawyers a chance to push themselves to the fore.
One example would be the new Chairman of UBS, Peter Kurer. The announcement to replace Marcel Ospel with Kurer as chairman of the embattled Swiss investment bank back in April this year must have come as a pleasant surprise for many in-house counsel. Rarely do lawyers reach these heady heights. Some no doubt saw the appointment as a significant departure from the apparent perception that such lofty stations are usually beyond the pale of the legal profession.
That is not to say Kurer's ascendance came without criticism. A number of City players and pundits were quick to snub his appointment. The Financial Times claimed at the time that the decision was indicative of a "failure to find a more suitable replacement". Olivant Advisers Limited was equally unimpressed. In stating that his appointment was "a serious concern" the boutique investment house pointed to Kurer's legal background and his alleged lack of general management expertise.
The elevation of the man who has been general counsel to UBS since 2001 is probably indicative of the bank's cautious approach in the wake of the sub-prime debt crisis. Such a motive, perhaps, re-asserts the stereotypical image of lawyers as little more than risk managers. But lawyers are doubtless more conscious than their business colleagues of good legal risk management. Indeed, almost immediately following his appointment, Kurer announced plans to reshuffle the Board of UBS with the creation of a separate risk committee to combat future financial crises, a strategy which was adopted by other ailing institutions seeking to reassure shareholders and stem the out-flow of investors' money.
Without doubt, the current downturn will increase the pressure on in-house lawyers to prove their worth against an ever decreasing legal budget especially in the financial and real estate sectors. On the other hand many boardrooms might be turning to their legal advisers to rescue the situation in their hour of need. The issue of legal risk affects many different areas of an organisation's business. Indeed it seemed to be one of the main drivers behind UBS's recent announcement to break up the bank's operations into three discrete areas of business: investment banking; global wealth management and global asset management. Kurer stated that the reorganisation will bring greater flexibility and transparency to the bank's operations. He is also intent on instilling the fund managers with the "correct appreciation of risks".
But will the credit crunch really see more layers taking centre stage in the world of business? And if so, will it last? It is worth remembering that UK board rooms are hardly littered with lawyers. Whilst in-house advisers are no doubt valuable assets to their companies, senior positions remain mostly out of bounds. Indeed, only nineteen solicitors currently hold a non-executive position with a FTSE 100 company. Such opposition to career progression does not seem to figure in other jurisdictions. Our American cousins for example enjoy far greater success in climbing the corporate ladder: Dick Parsons, CEO of Time Warner and Hank Greenburg AIG's Chair until 2005 are but two examples.
Kurer's rise to Chair of UBS could be regarded as another positive move for ambitious in-house solicitors. Chris Arnull, associate general counsel at KPMG, claimed that the step up "is good news for lawyers". Cynics, however, will argue this is a short term strategic move to sure up a troubled company in difficult economic times. With the bank's announcement on 15 September to write down a further $5 billion on top of the $42.5 billion it has wiped off regarding its subprime related assets, the storm is far from over. Kurer's restructuring of UBS will take time to pay dividends, if any. Perhaps the true indication of whether real cracks are developing for lawyers in the corporate glass ceiling will be if Kurer's tenure continues after market turbulence abates.
