Our favourite stories this week December 10th-16th 2018
The stewardship role of professional advisors. There are so many vital questions prompted by the joint parliamentary select committee report on Carillion.
The role of professional advisors is an important issue.
I have had experience of being part of the leadership of an organisation on the edge. I vividly remember my shock at discovering how much money might end up in the hands of professional firms in return for advice that in retrospect seemed obvious.
Without prejudging the fairness of the amount paid to lawyers, investment banks, auditors or consultants I would suggest that there could be a different approach.
Professional firms pride themselves on building deep relationships with corporate clients and it pays them to do so. How about building in to the contracts a ‘living will’ approach?
Each year the partner calculates all income earned from the client and sets aside a small percentage into an escrow account. This sum builds up over the years and is there to be called on in the event of a Carillion-style crisis.
Alternatively, the relevant industry body could collect such funds on behalf of members on a collective insurance basis so that companies in crisis could rest assured that they had dedicated funds for crisis advice and their long-time business partners would equally know that the budget for this advice was limited.
There would be marketing disadvantages to professional firms who refused to adopt this practice. It would be a true test of their claims to have deep relationships with their clients.
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