Recession? Not Here, Say U.K. Regulatory Lawyers

[WSJ Law Blog]

We know of big-firm practice areas that are doing well — bankruptcy and restructuring is one that comes to mind. But perhaps no one in the law-practicing world is having quite the time of it as are regulatory lawyers in the U.K.

According to a recent Bloomberg article, U.K. regulatory lawyers advising clients on the financial crisis and related scandals are billing as much as 1,000 pounds ($1,440) an hour. That’s 50 percent more than mergers-and-acquisition lawyers did two years ago, during the bull-market run.

“It’s our time in the sun,” said Darren Fox, a regulatory lawyer who advises hedge funds at London-based Simmons & Simmons. “If you ask which departments are very busy and where clients’ worries are, it tends to be in the regulatory area.” (By the way, we love the triptych of photos Simmons puts on each lawyer’s page. Very nice touch.)

Part of the issue: Both the U.K. Financial Services Authority and the Office of Fair Trading have promised to bring more criminal cases against senior executives. Meanwhile, the world’s economic powers have promised to tweak their collective approach to financial regulation. Clients are asking questions, and their lawyers need to have up-to-the-minute answers.

Financial regulatory advice can therefore be billed at a premium, even while law firms are suffering the consequences of the credit crisis. “Our general experience is the bigger the problem, the more willing people are to accept the fees,” said Michael O’Kane, a criminal and regulatory specialist at Peters & Peters whose clients include two former British Airways executives charged by the OFT with operating a cartel.

In a recession companies’ in-house lawyers will typically try to do work themselves rather than hire a law firm to do it for them, said Steven Francis, a former FSA enforcement official now a regulatory lawyer at London-based Reynolds Porter Chamberlain.

“That isn’t true in my area,” Francis said. “They can’t trust their instincts in a world that appears to have gone mad.”