Blog
Vultures and the Obama Rescue Package
Thursday, February 19, 2009
Published in "John Flood's Random Academic Thoughts (RATs)" at
http://johnflood.blogspot.com/2009/02/vultures-and-obama-rescue-packag
(clickable links found in original post at RATs)
The New York Times is predicting the return of the vulture investors with the passing of President Obama's rescue package. But no one is quite sure.
I've written extensively on vulture funds who invest/buy distressed debt. (The link here will lead you to at least another six posts and papers.)
Vultures want to buy debt cheaply enough that they can sell it on for a gain of a few points. The question is: Is the current debt available so toxic that it's radioactive? So there is a waiting game. Because if it is terribly toxic, the price should be much lower.
One such vulture, Howard S. Marks, is sitting on a fund of $55 billion. But as the NYT says, "He and other potential investors are wary of the risk in this case." Moreover, "Even for the vultures, the risks — political as well as financial — seem daunting. Some worry about being seen as profiteers who benefit at taxpayers’ expense, even though the economy could get worse unless they swoop in."
Yet, "If the vultures do alight, their rewards could be enormous. Funds specializing in distressed investments earned annual returns of more than 30 percent in the early 1990s as the economy pulled out of recession."
They fear being damned if they do and damned if they don't. Now there is discussion about the government putting "a floor under their potential losses."
Nevertheless, vulture funds are back and it won't be too long before they crop in the UK and elsewhere. Indeed Business Week says they're already here. As they say in New Orleans--and it's almost Mardi Gras--laissez les bons temps roulez!
The Perils of Women in Law
Wednesday, February 11, 2009
Published in "John Flood's Random Academic Thoughts (RATs) at http://johnflood.blogspot.com/2009/02/perils-of-women-in-law.html on 5 Feb 2009
I am writing a paper about women in law. A lot of it is as one would expect, high attrition rates: low promotion rates, and pretty awful retention rates.Then along comes Allen & Overy's suppression and sacking of Deidre Clark, a lawyer in their Moscow office. Her offence is to write mildly erotic fiction on her own website. The story narrates the adventures of expats living in Moscow. Here's how she describes the life (from Chapter 7):
Anything goes in Moscow: you can drink as much as you like while driving, you can wear your seatbelt or not, you can smoke wherever you want, including elevators and restrooms, you can buy any drug over the counter, you can eat as much fat as you like, you can fuck anyone you want (including the guy who is interviewing you for a new job, I found out once) and, maybe most importantly, you can dress like a complete slut if you feel like it.
There's always been an air of the wild west about Moscow and expat communities use this type of environment to break free of the constraints they have back home. A & O obviously thought Deidre had broken too free.
(Photo of Deidre here)
(Photo:Marck Franchetti )
At first they sent her a cease and desist order not to write any more chapters of her book. Then shortly after they fired her for gross misconduct.
According to The Lawyer, Deidre has instructed Fox Williams to sue for unfair dismissal. The story is a little more complicated however as she had already filed a grievance against sexual harassment by a partner. Whatever the outcome A & O is going to be paying big money and they are going to damage their reputation.
In an interview with the Times, Deidre Clark talks about life in Moscow and how the law firm suppressed her right to free speech. She is from the US where this matters. The Times equates her plight to that of Petite Anglaise in Paris, an English woman who worked for a French company that sacked her when it discovered her blog. She won big damages in her court action. We shall see how Deidre Clark gets on.
There are lots of stories of harassment in law firms by senior figures. Mostly they are dealt with quietly and the partner might be told to behave or not. If anyone is to be moved or removed it will be the associate. She at least will get a good reference.
While law firms are improving their "diversity" figures across gender and ethnicity, they are still poor in absolute terms. Stories like this will work to the detriment of law firms as they try to recruit new staff. The world doesn't respond to simple command and control forces any more. It is a much more subtle and complex place. Web 2.0 networking--Facebook or blogs--means life is more multi-directional and multi-dimensional.
Life is not just hierarchical. The horizontal axis is even more important. It's important for living life socially and, crucially, economically. The complexity of organizations and the networking brought about by technology mean that entities communicate with each other in many different ways. There is more permeability among institutions as groups come together for specific purposes then disband. Permancy is redundant.
Perhaps, however, the change that business, including law, is finding hard to take on board is the emotional aspects of work and life. These were always kept separate. No longer. The emotional part of work is integral to its successful completion. Some actually seek it.
Orrick Herrington & Sutcliffe's senior partner, Ralph Baxter, said at the Georgetown Symposium on the Future of the Global Law Firm last year that law firms should take the intellectual law training for granted. What firms really needed was "right brain" abilities that enabled lawyers to empathise and collaborate with clients. Now this is an overly mechanical and instrumental view of what firms want from their associates. But at least it shows they are beginning to understand the complexity of modern life and how it can impact on the institution as well as the individuals.
Allen & Overy has yet to understand that the figure of the stiff upper lipped Englishman no longer represents them and nor should it.