Adam Farlow is head of capital markets (EMEA) at Baker McKenzie. Here, he shares his experience during the crisis with The Lawyer.
What was your career situation at the time of the global financial crisis?
I was a senior associate when Lehman Brothers failed, and I was probably in the unfortunate circumstance of Lehman being my biggest client that year.
I was at Allen & Overy at the time. I had helped to form the firm’s US practice – I was their first US summer associate – and was focused on US capital markets and high-yield work.
Where were you when Lehman collapsed?
I was in meetings off-site when the crash happened, and we were all reading the papers with quite a bit of dread: it was clear from the minute Lehman failed that things were not going to be the way they had been previously. A&O famously got rid of three-quarters of their acquisition finance practice, which is a very dramatic shift for a firm like that, and I was actively involved in that practice.
There was probably less coverage around the US team, but by the time the dust had settled half the US team had left. It may be fair to say that, not just for me but most of my colleagues, there was a certain amount of survivors’ guilt that we weren’t the ones who had lost our jobs.
What’s your most vivid memory of that time?
I don’t normally talk about this so much but I walked outside and vomited in the bushes. It was just obviously going to be so bad. That’s my most vivid memory. That or picking up the newspapers and seeing the rawness of bankers leaving their offices with cardboard boxes.
When was the moment when you realised things were going to be really bad? Had you any indication in the months leading up to the big crisis?
There will be a lot of people who will say they saw this coming for a long time, and the crash vindicated their premonitions. My little brother was a hedge fund trader in a very bearish fund that went against the market: they viewed it as a vindication of their prescience.
Personally, I didn’t see it happening until it happened, until we picked up the paper on the Monday morning with pictures of our friends at Lehman – and I mean that sincerely, I had good friends there – carrying their possessions out of the building.
I don’t think anyone really understood in advance was coming, but it certainly didn’t take long for us to work out how bad it was going to be. We were shocked on that Monday morning, but the time that week finished you knew that life had changed, not just for the investment banking community, but really for everybody related to the City.
What about the effect it had on your career?
A group of us were all off-site and were focusing on our plans for the future as capital markets lawyers. It became clear that the plans that were started that weekend were not going be ones that would play out.
It had a huge impact and continues to reverberate in some ways. It may be a bit of an exaggeration to say it’s led to a ‘lost generation’ of bankers and lawyers, but not by much. I had CVs of hugely talented lawyers cross my desk who were graduating at the wrong time. They spoke multiple languages, they had just the right skill set, they would have been an easy hire a year earlier, but they never got their break.
And there was the stress it caused for everybody – obviously for people who lost their jobs but for those of us who stayed on and their families as well. My wife is a nurse: prior to the crisis, she could not have told you what the FTSE was, but she was waking me up in the mornings and telling me what the Nikkei had done overnight.
I actually was very busy during the crisis despite everything. Part of that was down to the redundancies – because there were fewer people around I ended up covering not only my high-yield practice but I also covered the US aspects of A&O’s securitization practice, trying to deal with the fallout for those deals.
But there was no doubt that it created a cloud over careers: for a time I was very close to moving to Moscow, because the Russian markets continued pretty strongly for a while despite the slowdown in the UK. Then that dried up – I had begun the process of getting our kids into schools in Russia but we ended up reversing course and staying in London.
That itself was an interesting thing: there is so much competition around school places in London. To take kids out of school and then move them back might not always be a smooth process. But there were so many people leaving London, particularly with my [American] accent that, while it was terribly disruptive as a family, we got their spots in their old schools back.
A huge group of lawyers went abroad looking for opportunities: many went to Russia, the Gulf or further afield trying to find the transactional work that was not going to be in London for a while. People became much more generalist and much more flexible: if you were only doing securitizations, or only willing to work in London, that was really going to constrain you.
Have law firms learned the lessons of the crisis?
It did create opportunities for lots of players in the market: there were banks that had a very good crisis, and there were changes around the law firms that were servicing those clients.
It created real opportunities for lots of firms to break in to the market where it might not have been possible had the status quo continued. We as a firm are much stronger today, nine years since Lehman, than we were before, and certainly there are banks that are better off today than they were.
I think that the London legal community, which is the only one I can speak to, weathered the crisis quite well. There was a sense – probably not unreasonably – at the height of the financial crisis that life would never be the same. In fact, the surprising thing is that it didn’t take very long before life became ‘normal’ again.
There were winners and losers in that process, and clearly there were law firms that failed and lawyers that needed to find new homes, but I think if you were to have asked most people at the height of the crisis what London in 2017 would look like, they would have predicated a very different outcome. It shows the ability of our legal community to adapt to change.
Your kids must be grown up by now – have they expressed any interest in a career in the law?
I’ve got three kids and at the time the oldest had just got through applications to go to prep school: he was the one I was most concerned about with all the upheaval. But he is 16 now: he has just taken his GCSEs and is starting his A Levels, and yes, he’s planning to go on to study law.
For a kid who has spent most of his conscious life living through the financial crisis and its aftermath, the fact that he sees a future in the law as desirable probably says a lot about the robustness of the profession.
This is part of The Lawyer’s series on the global financial crisis, marking 10 years since the credit crunch. If you want to tell the story of how your career was shaped by the crisis, get in touch: firstname.lastname@example.org