The demise of Lehman Brothers and the potential fall out from their administration has shocked much of the city and reverberated around the business community generally.
The fall out from this massive business failure will be felt for some time to come, both on a personal and corporate level, as the effects begin to hit many people and businesses. Employees who haven’t been paid and perhaps can’t find another job, suppliers waiting to see if their outstanding bills will be dealt with – the list is potentially endless.
Of course, every cloud has a silver lining (sic) and I say with some shame that certain sectors of the accountancy profession are going to benefit dramatically from Lehman’s failure.
Just like vultures waiting to swoop, recent reports have confirmed that PWC, one of the ‘big four’ firms of accountants, has been appointed as administrator and is expecting a “bumper payday”.
According to one back of the envelope calculation, there are at lest 80 people already working on the administration at an average rate of £300 an hour working 10-12 hour days. At that rate, PWC will be picking up fees of more than £1m a week! The complexity of Lehman Brothers affairs and the massive volume of transactions will probably mean that PWC will be working on this administration for many months if not years – not bad work if you can get it!
I said before that I report on this with some amount of shame, because the idea of a group of already highly paid individuals benefiting from the misery of thousands of others just doesn’t sit comfortably with me. As it is, in times of difficulty, the insolvency profession rubs its hand with glee just like undertakers at a motor way pile up.
I am not even sure how much it is in the public interest for the insolvency profession to be in the private sector. Without in any way venturing into the political arena, it does seem to me that the insolvency sector might better serve the British public if it were somehow controlled centrally. Dare I say it; it could even generate substantial revenues for the government. More than this, there has always been more than a suggestion that insolvency practitioners not only don’t operate under the same competitive pressures as most businesses, but also may not always be as independent and inscrutable as they perhaps should be.
My insolvency practitioner friends, (and I do have some), would say that there may a little bit of envy in that I don’t possess an insolvency licence and they may well be right. However, as the Lehman Brothers carve up begins, I’m simply not comfortable with the situation.