When was the last time you heard a lawyer joke?
In surveying the reputation landscape following a year of upheaval in the global economy, it is clear that the financial industry has taken a reputational hit — and that the damage has extended to a wide range of leading companies, and in some cases, entire business sectors. Interestingly, there is one dog not barking in the night: there has been no hue and cry over the role lawyers may have played in contributing to the dynamics that created the crises of the past year.
There were undoubtedly attorneys, both in-house and at outside firms – and many of them at the top of the profession – who were deeply involved with every one of the institutions that have faced the klieg lights of political and public scrutiny and criticism this year. Yet, corporate lawyers have thus far not emerged in the public consciousness as part of the villain class. Indeed, the nation’s major law firms are more likely to feature in the news in the context of stories about lay-offs, displacement of first year associates, cancellation of summer associate programs or other indicia that there is a significant re-set going on within the major firms. While showing no mercy for executives at financial institutions and companies, much of the media has characterized law firms and lawyers largely as victims of the downturn.
Is there an explanation for why a group of professionals that was the brunt of the public’s ire in past decades is for the most part under the radar this time around?
One possibility is that attorneys are now receiving the benefit of the disparity in compensation structure that they have bemoaned for years. Lawyers, while certainly paid handsomely, are typically paid by the hour for the services they provide. They do not ordinarily receive out-sized premiums for structuring a complex transaction or for researching and reviewing the regulatory implications of new financial instrument or practice, they don’t get a piece of the deal, and they rarely, if ever, receive a Wall Street style bonus. Many in the profession think this is out of balance with the value attorneys bring to their corporate clients — every year there is speculation that law firms will finally enjoy new and creative billing structures, but hourly fee structures and retainer agreements remain the norm. While hourly rates grew significantly during the boom years and may appear to be excessive to some, and lawyers are paid win, lose or draw, their fees are tied to services and to work performed. Unlike the massive bonuses that were the currency of success on Wall Street, even while the TARP funds flowed, fees paid on an hourly rate are comprehensible to journalists and to their audiences as part of the cost of doing business.
It also makes a difference that some high profile attorneys have emerged to help mop up the mess. Leading members of the Bar have acted as the receiver in the case of Mr. Madoff, and as the problem-solving czar on compensation. Litigations that have followed the crisis place lawyers in the public consciousness as avengers and defenders – as opposed to participants in the underlying transactions and behavior. While there has been some eye-brow-raising about the legal fees charged in the Lehman Brothers bankruptcy proceedings, the scrutiny was short-lived and, again, the fees come as no real surprise to journalists or the public.
As the post-financial crisis reputation cycle continues to evolve, the legal community may ultimately receive some share of scrutiny for its role, but it is unlikely at this point to be significant. For most audiences, the narrative of who is to blame was written and received in the crucible of last fall and winter’s melt-down in the financial industry. And, the lawyers were not cast as villains or even central players.