When the [Iceland] government took over Glitnir, me and everybody else with a bit of sense knew that things were going to get dramatic,” says Gunnar Thor Thorarinsson, a former in-house counsel at Baugur Group. ”Everyone in Iceland knew that a total collapse could follow.”
When his prediction came true Thorarinsson moved into private practice, joining Icelandic firm Logos Legal Services’ London office. He feels lucky in finding a job so soon in such a tough market – but he need not. The aftermath of one of the most spectacular economic crashes in history left many in-house lawyers with uncertain futures, but it also created a demand for experienced advisers.
And private practice has been reaping the benefits.
“When the three major banks collapsed, what [the government] did was to split each bank into old and new banks,” relates Gier Gestsson, a partner at Jonsson & Hall. “Old banks deal with foreign investment and the new ones domestic. After the collapse a lot of highly qualified people who didn’t think it terribly exciting to work in either joined private firms.”
But to what extent have Iceland’s in-house posts been deserted, and what effect will this have on the country’s legal market?
“I think it’s early days,” says Fulltingi Legal Services partner Stefan Thor Ingimarsson. “There are some instances of people changing, but it’s not a stream. Although in 18 or 24 months the situation may change.”
“To call it a trend would be a big statement,” Gudmunder Oddsson, head of Logos’s London office, pitches in. “But quite a few senior lawyers have been forced, or had the opportunity, to relocate, because all the major banks have been scaled down and most of the major private equity houses have disappeared completely.
“The bulk of these people are still at the banks, but private practice has become more attractive because the major banks are government-owned and this reflects on the remuneration packages they can offer. So as far as senior lawyers go, they may be tempted to go into private practice or set up boutique practices.”
One former in-house counsel who is setting up a boutique is Helgi Sigurdsson. He was head of legal at Kaupthing Bank before opting for private practice, and admits that the loss of the frontier spirit has diminished the appeal of Iceland’s financial institutions.
“At Kaupthing we were running a very large bank with very highly qualified people,” says Sigurdsson. “We attracted people from the best universities in the world, people who were always successful in their business, and we could choose from between 50 and 100 applicants, picking the most qualified. That’s not the reality now”.
A partner at a leading Icelandic law firm, and a former banker, agrees with Sigurdsson. “In 2000 there were very exciting things taking place in the banks, and for the first five or six years things were very good,” he recalls. “But then things turned wrong. Banking’s been downsized quite significantly and will be downsized even more, and the assignments are very different than before – no M&A, just recovery work.”
But recovery work is vital work.
“There’s a heavy demand not just for people who can do the legal work, but those who have the background of financial undertakings and know the ins and outs of foreclosures and other related work,” says Jon Finnbogason, a former in-house counsel at Kaupthing who moved to Byr Savings Bank.
Everyone agrees that in-house counsel have their hands full with interesting work at the moment. But there is a fear that, when the wave of restructuring work has broken, the banks will no longer be able to offer the kinds of challenges the top recruits need.
For private practices, however, the challenges have just begun.
With experienced lawyers swelling the ranks within firms, new niche practices popping up and fewer large, lucrative clients, competition is sure to escalate and the landscape of Iceland’s legal market is sure to change.
“In terms of the former in-house lawyers going into private practice,” says Oddsson, “there are a few that have gone solo, and although no new [big] firms have emerged yet, I’d be surprised if a new player was not to emerge.
“For private practice I’m optimistic.
We’re a nimble economy and have an underdeveloped private practice market. We’re catching up to the rest of Europe and although we probably won’t see the same level of activity that we did during the boom again, the legal profession is more important to businesses than ever.”