Legal Giants Thrive Amidst Mounting Criticism
Some of the UK's most prominent law firms are enjoying record-breaking financial success despite facing severe criticism for their conduct in high-profile scandals. Protected by professional insurance, these firms appear to avoid significant financial penalties for alleged ethical breaches, allowing profits and partner pay to soar. This situation persists as the largest UK and US international partnerships in London report unprecedented earnings, raising urgent questions about accountability and regulation in the legal sector.
Scandal and Profit: The Cases of HSF and Dechert
Two recent cases have brought this issue into sharp focus. Herbert Smith Freehills (HSF) was sternly criticised for its role in the Post Office Horizon scandal. Sir Wyn Williams, chair of the public inquiry, rebuked the firm for adopting "an unnecessarily adversarial attitude" towards making compensation offers to over 900 wrongly prosecuted subpostmasters. HSF has billed at least £188 million in taxpayer-funded fees for its work on the scandal's aftermath. Despite this, the firm's latest accounts show annual profits rose to £278.6 million, up from £213.1 million the previous year. HSF is now under investigation by the Solicitors Regulation Authority (SRA).
In a separate case, a judge in 2022 found "almost unimaginable" and "extremely serious conduct" by Dechert and its now former partner, Neil Gerrard, while acting for mining company ENRC. The judge ruled that Dechert acted to encourage a Serious Fraud Office investigation into its own client to boost its fees, with Gerrard "lying continuously" about media leaks. Yet, Dechert's UK operating profits have grown to £54.8 million. A further trial this year will decide potential damages, possibly around £216 million, but any costs Dechert must repay are expected to be covered by its insurer.
A System in Need of Reform
Legal experts argue this creates a dangerous culture of impunity. Because of their insurance cover, firms that break rules face no real monetary consequences, while public bodies and taxpayers are left exposed. Professor Richard Moorhead of Exeter University stated regulators are "outgunned" by the financial might of the major firms they oversee. A November House of Lords select committee report concluded that "trust in the legal profession has also been undermined by high-profile examples of unethical practice."
There is also concern that the growing dominance of US law firms in London is eroding ethical standards in pursuit of profit. Professor Robert Barrington of Sussex University warned that US-style lawyering is often perceived as prioritising commercial success over the public interest. Justice Secretary David Lammy recently argued that while commercial legal services flourish, law firms must contribute to strengthening the justice system they rely on. However, as the booming profits at Dechert and HSF demonstrate, even findings of wrongdoing do little to impact their bottom line, protected by policies that shield them from the financial fallout of their own actions.
