Insolvency practitioners have long been nicknamed the “undertakers of the profession” and “vampires of a recession”. But for 40 years, I have been proud to call myself one.
I first became an insolvency practitioner when, aged 24, I walked into the tiny liquidation department at Thomson McClintock (now KPMG) and negotiated a transfer from the audit department.
Not once have I regretted that decision, nor my subsequent moves to PKF where I was head of the UK and London corporate recovery and insolvency departments, and Carter Backer Winter (CBW) where, until I retired earlier this month and set myself up as a business adviser, I was partner and head of corporate recovery and insolvency.
I’m also proud to say that, until the recent recession, I managed to save something from every business or client I worked with. And some of those clients were certainly very memorable: I advised Lady Archer during the Lloyds Insurance Market collapse of the 1980s; negotiated a settlement for shamed, bankrupt businessman Darius Guppy in the 1990s; and since 2008 have dealt with the complex Dawnay Day insolvency.
Because I invest so much in doing my best for my clients, it makes those unfair nicknames all the more difficult to hear - I spent a portion of my career trying to correct the misconceptions they are based upon, by speaking to young accountants, the media and anyone who would listen.
It is partly due to confusion over the fact we bill clients by the hour, rather than calculating remuneration by percentages. This has been perceived as exploiting the vulnerable when, in fact, it is with very good reason. Back in the 1970s we determined fees by a percentage but that all changed when Peat Marwick, the firm dealing with the insolvency of Rolls-Royce, chose to bill on a time-cost basis instead, because the percentage would have been too great. It would have been a huge windfall for the partners but it also would have been obscene. That’s why most firms now charge on a time basis instead.
Another challenge I faced during my 40 years in practice was the assumption made by creditors that, when an insolvency practitioner gets involved, they might as well throw away the paperwork and move on. It was often very difficult to engage them in the process and explain that if they did, they would stand a greater chance of improving their position.
I also learned quickly that insolvency practitioners need to have certain characteristics to deal with people who are confronting crises, even if those characteristics do nothing to improve our reputation. Compassion is important, but being hard-nosed enough to cut through a client’s emotions is even more crucial.
This is something I learned the hard way as a young practitioner when I sat opposite a man whose company had collapsed. He was blubbering, saying he couldn’t feed his family and I felt distraught, realising I couldn’t help. But after he left, another employee said: “You weren’t taken in by him were you?” He turned out to be a well-known local conman with lots of other jobs and a better salary than me.
It made me realise that not everyone you deal with is entirely straight. It also taught me that whoever the client, they won’t benefit from tea and sympathy. Ploughing on and helping them with the situation is more valuable than everything else.That hard-nosed approach won’t help dispel those nicknames, of course, but it is often what clients need.
And when one has saved a business or made a good old-fashioned commercial deal where you get the best possible price and claw back money for creditors, it is a hugely satisfying feeling. So good reputation or bad reputation, working as an insolvency practitioner has been a terrifically exhilarating journey.