Alasdair Simpson, Manches & Co senior partner, knows how tough it can be at the top. As one of the City's leading golden handshake lawyers, he has to deal with the executives of top UK companies who find themselves on the receiving end of a P45.
Packages that looked fantastic over lunch suddenly fall victim to a clause in the small print and discretionary bonuses are often the first casualty when things go wrong. And it seems the captains of industry often have no one to blame but themselves.
“Macho guys charged with running public companies think they can look after themselves, but as a general rule, they don't take legal advice when they take a job on,” explains Simpson. “Everything's fine and dandy at the beginning. It is then my job to pick up the pieces when the relationship sours.”
While he is rarely asked to negotiate a package, Simpson believes high fliers would do well to get a lawyer involved at the start – not just to inspect the legal fine print but in the nitty-gritty of bargaining. “It is extremely difficult to negotiate on your own behalf,” he says.
And Simpson is keen to impress on the executives he acts for that a lot of the heartache is unnecessary; prevention is better than cure.
Simpson is also sought after by the companies doing the hiring and firing. He explains: “They are very anxious not to be seen to pay too much and they want someone with experience of what is fair.”
Simpson's clients invariably come by recommendation – he seldom has to make a pitch.
And while he is happy to work for either side – executive or company – Simpson finds representing the executive most rewarding.
“It is more nerve-wracking working for executives,” he says. “There is more at stake; it is probably the most traumatic thing that will happen in their business life. You are aware they may never work again and may only have one shot.”
Simpson feels no need to be defensive about the high salaries paid to top executives. “How much is it right to pay the boss of British Gas? Public opinion should recognise high salaries are not in themselves wrong. But share option schemes that are paid out even if the executive puts in a lacklustre performance are wrong.”
He sees nothing wrong in a high salary, provided the executive is adding value. “If you really are delivering the goods, why shouldn't the company pay you £1 million a year.”
Bonus schemes have become more sophisticated and the business of rewarding performance is a more complicated affair in the nineties. Indeed, employment law itself is an expanding discipline – both in basic legislation and evolving case law, particularly at the European level – and a cultural shift in working practices over the past decade has helped to ensure a steady stream of work for top employment lawyers such as Simpson.
The notoriously “short-termist” City institutions are putting enormous pressure on public companies to produce good financials. The hire 'em and fire 'em culture has not just affected the unskilled labour market but is also affecting those at the highest level, and there is a lot more mobility among the echelons of top executives as a result.
Manches was behind the field in setting up a dedicated employment unit, but the firm does retain one advantage.
As Simpson explains: “We are virtually the only firm where the senior partner heads the employment group. That is very attractive to many clients. They know they are not being passed down to partner number 25 and are receiving attention at the top level.”
He adds: “It is one of the few areas in which grey hairs are valued.”
Simpson believes his firm's employment expertise will help it survive while others of a similar size are not so lucky: “Only three kinds of firm will survive. The top six to 10 total full-service firms, pure niche firms, and mid-size firms such as ourselves where we are known for two or three specialisations.”