Here’s a thought: if our electorate comprised City lawyers okay, maybe not that most appealing thought the Tories would storm to an election win on Thursday. Legal Week magazine recently reckoned that almost two thirds of City partners (63 per cent) were backing Cameron. A survey by DLA Piper of 545 senior UK business figures (and clients) revealed high levels of enthusiasm for the party’s big names.
The DLA survey was completed at beginning of April “before the Nick Clegg resurgence”, explains Catherine Usher, London managing partner. Respondents were asked “who would best steer the UK out of the downturn”. “There was 36 per cent vote for David Cameron and a 21 per cent vote for Ken Clarke and so a pretty solid Tory majority, followed by Vince Cable at 17 per cent”, Usher reveals, adding that it came as “no surprise” that “the City’s legal community rank Labour lower down in favour” with Gordon Brown and Alistair Darling trailing with 11 per cent and 5 per cent respectively. There was, however, some sobering news for the Tories. All the three parties’ big names beat shadow chancellor George Osborne, who scraped a pretty dismal 3 per cent. Even pre-surge, Clegg scored 4 per cent.
Tony Williams, founder of management consultancy Jomati and former Clifford Chance managing partner, puts “market fear” near the top of 2010 election concerns for the Square Mile’s lawyers. “It’s not the boom or bust that causes problems for law firms and professional advisers but a long period when the market is so uncertain that clients sit on their hands. If we ended up with a hung parliament or sterling crisis, the risk is that a lot of businesses would just sit on their hands for six to 12 months. It could be very bad news in the beginnings of a recovery”.
David McIntosh, chairman of the City of London Law Society, reckons such fears are overstated. “There is a lot of scaremongering. Nobody likes uncertainty but within a short period deals will be struck”. He complains of “an air of artificiality around the manifestoes”. “The three main parties are obsessed with a hung parliament. They haven’t done their sums. We won’t know the full detail of their policies until later”.
Donald Stewart, a partner at Faegre & Benson and chairman of the Quoted Companies Alliance, has a slightly different view of lawyers’ concerns.”Bank lending is number one, followed by avoiding huge amounts of regulation. I’m a firm believer that the cause of the financial crisis is the failure of regulators rather than regulation. The rules are all there. What we need is people who have the wit, courage and fortitude to enforce them”.
Stewart reports how conversations “spontaneously turned” to the Liberal Democrats following the first leaders’ debate and “what damage they’d wreak in the City”, especially the proposals to break up the banks. “How can we maintain our position as a world finance centre, when we won’t have any domestic institutions big enough to effectively participate?” he asks.
Have the Lib Dems shifted the political agenda for lawyers and their clients? Not really, reckons Catherine Usher. “From the business leaders that we polled the four big issues are: tax, regulation, environment and employment as opposed to banks and bonuses.” In the DLA survey, only a tiny minority (3 per cent) thought that financial regulation could remain untouched. Most supported wide-sweeping reform and, in particular, four out of 10 backed the Tories’ idea of disbanding the FSA with responsibilities split between a new Consumer Protection Agency and the Bank of England.
Michael Grenfell, a partner at Norton Rose LLP, points out that politics is “less ideological” these days. But changes to the rules on M&As (such as Labour’s plans to restrict takeovers of British firms on public interest grounds) “represent genuine difference between the parties”. Donald Stewart isn’t impressed by Labour’s proposed takeover regime reform. “It reads like a sound-bite policy to soothe people who feel terrible that an American firm like Kraft can come over and buy Cadbury’s”.
It seems that the Tories are cooling on Labour’s radical programme of liberalisation of legal services. Over the last month, shadow business minister Lord Hunt of Wirral and shadow justice minister Henry Bellingham expressed concerns. Bellingham called ABSs or, alternative business structures, “one more assault on the high street solicitor”. “The whole purpose of the Legal Services Act is to facilitate greater access to justice through increased competition and make more legal services available to more people,” says Douglas Preece, a partner at Fox Williams, adding that protectionism goes against the very spirit of the legislation. David McIntosh has some sympathy with a more cautious approach. “It is better to have the right form of ABSs more slowly than the wrong ones in a hurry”.
So should we be surprised that the City’s legal establishment has fallen for Cameron? Well, the Legal Week poll also indicated 20 per cent of partners were backing Labour and, as Tony Williams points out, there has always been “a champagne socialist element in the market”. “It shows how the City has fallen out of love with Labour. Whether they are in love with the Tories might be a different issue”.
Jon Robins is director of the legal research company Jures (www.jures.co.uk) and a freelance journalist.