Sunday, May 16, 2010

Boom or bust, big names in Irish professional services are raking in the money

Boom or bust, the big names in Irish professional services are raking in the money as they take advantage of the semi-cartel which operates at the top, with the help of the Irish government.

Even though big players in the economy, these firms are not obliged to disclose any financial performance data and in turn, the Government provides a Victorian veil of secrecy on public contract information, behind the excuse of "commercial confidentiality."

The Victorian secrecy protects the insiders - - big firms -- and is both anti-competitive and against the public interest.

In Ireland, where the concept of "conflict of interest" gets little attention, cronyism is rife in many sectors where thee public sector is a big purchaser. Inevitably, it is difficult for outside firms to breach the cosy circles of influence.

Big 4 accounting firm PricewaterhouseCoopers (PWC) issues some performance data in the UK; in Ireland it just reveals total revenue.

The European Commission, the IMF and OECD have repeatedly warned about the semi-monopolies in the Irish sheltered sectors of the private sector but while Cowen calls for "sacrifices" it's business as usual for those in accountancy and law, providing undertaking services for the failed businesses of the crash.

The public sector is the biggest procurer of goods and services in the State and goes along with what are effectively fee cartels among professional services firms.

Lawyers and insolvency accountants are on a roll and the State's "bad bank" NAMA has a €2.5bn meal ticket for the big firms over the coming decade; Two civil servants run NAMA and it has already incorporated the Victorian era culture of secrecy on contracts -- which hardly helps to promote competition and cannot be in the public interest.

Dr. Don Thornhill, the chairman of the National Competitiveness Council said last month that a lot of second-tier law firms have let people go, but he asked, have the prices charged by those firms reduced?

Even though excess fees are either paid by the State or struggling business creditors, the professional institutes have nothing to say about it and IBEC, the employer's body, is also reluctant to upset vested interests.

Last February, in the High Court, an examiner seeking fees equivalent to a €884,000 annual salary for investigating the viability of the insolvent Dublin private members club Residence, was told by the High Court to re-examine his rates.

Mr Justice Peter Kelly said fees of €425 an hour sought by Jim Stafford, of Friel Stafford Corporate Recovery, were not acceptable in the current climate.

Stafford was seeking costs of €61,857, plus €50,000 legal costs, for the 90-day examinership period.

The judge questioned why five people (including Stafford) were involved in an examinership and he also queried the legal fees.

This Residence business was a small one -- just think of the bonanzas available from the bigger examinerships and collapses.

Any accountancy firm worth its salt could assess the viability of a business -- and any legal question is farmed out.

So why is it a closed shop?

Irish Law firms among Europe's top earners

The Irish firm Arthur Cox has one of the highest turnovers for a law firm in Europe and has reported annual revenue per partner in excess of €1 million, according to magazine.

The firm, reported fee income of €105 million and is in 14th place in a list of the top 100 in Europe in terms of turnover, which was published last week.

McCann FitzGerald at €100 million is in 16th place and Matheson Ormsby Prentice €95 million is 19th on the list, which excludes UK firms.

The magazine said Arthur Cox has 560 staff of whom 370 are fee-earners. Of these 235 are lawyers and 101 are partners. The revenue per lawyer is €447,000 while the revenue per partner is €1.04 million.

McCann FitzGerald has 429 staff of whom 272 are fee-earners, the magazine says. There are 198 lawyers and 69 partners with the firm having revenue of €505,000 per lawyer and €1.45 million per partner.

The figures for Matheson Ormsby Prentice show that it has 530 staff of whom 490 are fee-earners. There are 350 lawyers and 90 partners, with the firm having a revenue per lawyer of €271,000 and per partner of €1.06 million.

A&L Goodbody is 23rd on the list with a revenue of €85 million. It is reported to have 550 staff of whom 66 are partners. The firm’s revenue per partner is given as €1.29 million.

The big fee "cartels" in Irish professions; Time for Ireland to change "the natural state of things"