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A review of the Editor's Prefaces from prior editions (which the publishers kindly have included in this volume) of The International Capital Markets Review will reveal a common thread: what I referred to last time around as "a somewhat nervous look-back over the shoulder" both at the global financial crisis and the impact that it has had on the professional opportunities and workload of international capital markets lawyers.
That should hardly be surprising. Seven years on from the collapse of Lehman Brothers in September 2008 and nearly four years since the first edition of ICMR appeared, a great deal of ink has been spilt, so to speak, in recording the lessons of the crisis, much of it reflecting an attempt to focus on what brought the crisis about: risk-taking by bankers, blind spots and lack of understanding on the part of regulators, rating agencies asleep at the wheel and wrong economic incentives from policy-makers and management.
What is certainly interesting, is that with all the finger-pointing – bankers, regulators, rating agencies and policy-makers – law firms and lawyers in them have emerged relatively unscathed. There has been no shortage of law suits, enforcement actions, penalty fines, and most recently criminal prosecutions for financial market misconduct. However, it has been non-lawyers, and not their counsel, who have found themselves in the hot-seat.
Still, that begs, rather than answers, the question, "What was, or should have been, the role of the lawyer in mitigating the risk of a financial market meltdown?" Was sufficient resort to outside counsel made by financial institutions in the run-up to the GFC? Would greater utilisation of independent counsel have made a difference? What public responsibility, if any, do international capital markets lawyers have to ensure not just that underlying transactions are legal as a matter of positive law but that the financial marketplace is benefited, and financial market stability not threatened, by them? Until now, these are questions which seems to travel mostly beneath the radar screens of the financial market commentators who have been reflecting on the GFC.