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The City lawyer who argues that banking has become even riskier

T o David Morley, the phrase &ldquo;it is better to travel than to arrive&rdquo; must sound pretty strange, an expression invented only for those unfortunate souls who have not learnt to move at speed. For Morley, who joined top law firm Allen &amp; Overy in 1980 and has led it as senior partner since last May, is something of an expert at travelling fast. <br /><br />His tall, lean build suits his main interest outside work, endurance cycling. Not long ago he completed his second Etape, which is a Tour de France stage run for amateurs. Around 6,500 bikers set off on a 195km race in the French Alps climbing 14,000 feet over the course. The race begins at 7.00am and must be finished by 5.00pm. &ldquo;There are time trials all along the route and if you miss one you are eliminated,&rdquo; says the Allen &amp; Overy lifer in a flat, confident tone.<br /><br />He takes off his jacket and hangs it behind a chair in one of the Magic Circle firm&rsquo;s modern first-floor meeting rooms at its Bishops Square headquarters in the City. He flicks an eye at his watch; he is ready for business. <br /><br />Morley brings the same sense of mission to his firm &ndash; which employs 5,000 across 31 offices worldwide &ndash; and likes to get from point A to point B as quickly as possible. He will often finish an answer to a question with: &ldquo;What do you want to know next?&rdquo;<br /><br />Morley, only 53, has been at the very top of his profession as long as any lawyer in the City. After becoming a partner in 1988, he rose to head the firm&rsquo;s prestigious global banking department a decade later coinciding with the firm&rsquo;s speedy international expansion. After that he was elected managing partner in 2003, before moving on to begin a four-year term as senior partner last May.<br /><br />The firm has an established reputation as having among the very best banking and finance lawyers in the City, with its key clients reading like a Who&rsquo;s Who of world banking: Barclays, HSBC, Deutsche Bank, Goldman Sachs and Macquarie.<br /><br />All of this puts Morley in a strong position to give a view on the banking landscape a year after the collapse of US investment bank Lehman Brothers, which proved to be the symbolic start to the financial crisis.<br /><br />&ldquo;It is a political inevitability that there will be greater regulation in the banking system,&rdquo; he says. &ldquo;But what that means is yet to be settled.&rdquo;<br /><br />He continues: &ldquo;You could argue the current situation carries more risk. There are fewer banks and they are bigger. It is clear who the winners are, and they are likely to take more market share. Risk is now more concentrated.&rdquo;<br /><br />You can see what Morley means. Institutions like Bank of America Merrill Lynch, Barclays, HSBC and big players in Japan and China that have not been hit as hard have snapped up rivals and boosted market positions. In the US alone government figures show that over 100 banks have gone to the wall in the last year.<br /><br />Morley adds: &ldquo;People talk about some banks being to big to fail. But there is a case for saying that some banks out there are too big to save if they went under. It is a puzzle how to solve this dilemma.&rdquo;<br /><br />European Union-driven competition laws are trying to bring new players into the banking market across the continent. In the UK the EU has insisted Lloyds Banking Group and the Royal Bank of Scotland sell over 900 retail branches as well as businesses as a condition of receiving tens of billions in state aid. <br /><br />However, Morley is clear that collective action, across Europe and the globe, needs to be taken. He says: &ldquo;One country can&rsquo;t do this on its own. The G20 need to reach a broad consensus on this.&rdquo;<br /><br />He is not overly concerned that while countries like France, Germany and the US have pulled out of recession, nations like the UK and Spain remain in a slump, which could lead to cracks opening up across the united front the G20 has shown so far. Morley says: &ldquo;It is early days yet, but if the credit crunch has shown us anything it is how interlinked economies are. When the crisis happened, it spread around the world in weeks. I don&rsquo;t think politicians will forget that when they come to legislate.&rdquo;&nbsp; <br /><br />Morley, who has spent much of his career as a banking lawyer, says that around 2006 the cheap availability of credit began to give him cause for concern, although he had no idea of the storm that was to come.<br /><br />He says: &ldquo;Around three years ago we could see that a lot of firms were just getting credit too easily. It was getting out of control. It is easy to say that now. We were all involved and share some of the responsibility. But it is difficult for a lawyer to make that point to a client.&rdquo;<br /><br />When the downturn did come, Allen &amp; Overy made significant cuts. It announced in&nbsp; February it would cut 450 staff, nine per cent of its workforce, including 47 partners, at a restructuring cost of around &pound;44m. Morley, less than a year into his new post, also introduced a pay freeze for all staff and added that client fees would also remain on hold.<br /><br />He says: &ldquo;There simply wasn&rsquo;t enough work. It was best for the long-term interests of the firm. It is always difficult to make these kinds of cuts but you also have to think about the 90 per cent of people who are left at the firm, and what is best for them.&rdquo;<br /><br />Morley will give no timescale as to when wages and fees will begin rising again. And on further job cuts he says: &ldquo;We can&rsquo;t give any guarantees. But we don&rsquo;t envisage another set of large scale redundancies.&rdquo;<br /><br />These internal measures translated into a solid set of full-year results compared to its peers. Turnover was up seven per cent to &pound;1.09bn, while profits per equity partner fell nine per cent to &pound;1m. <br /><br />Its revenues rose on the back of more than 300 clients who needed advice after being tangled up in the Lehman Brothers collapse. Morley also says the firm has seen a lot of restructuring work over the last six months as firms adjust the amount of debt they carry in light of the financial crisis. <br /><br />However, Morley is keen, particularly in this market, that the firm is not only seen as the banker&rsquo;s law firm of choice. He says: &ldquo;It is true that we are well known for banking. But there is more to us than that. We are a well diversified firm.&rdquo;<br /><br />He adds: &ldquo;We want to expand our litigation practice. We think this area will grow over the next few years.&rdquo; He says a few years ago this area was 10 per cent of sales, currently it is 12 per cent, and over the next three to four years he wants to see it grow to 15 per cent.<br /><br />Part of this growth into litigation, Morley says, is because of its decade-long expansion in the US, through recruitment rather than mergers, where this area of law is a big part of the American mix.&nbsp; <br /><br />The business will also keep an eye on expansion in Asia and the Middle East. Morley says the firm&rsquo;s first foreign office was opened in Dubai in 1978, many years before everybody else. Last year it opened two offices in Saudi Arabia and Abu Dhabi. He says: &ldquo;We know the Middle East market well. We have operated in it for some time, and have good client connections here.&rdquo; <br /><br />Two thirds of Allen &amp; Overy&rsquo;s workload involves two or more international offices, and 55 per cent of its profits come from outside its London office. &ldquo;Ten years ago only five per cent of our revenues came from abroad, if that,&rdquo; says Morley.<br /><br />Yet, despite the global spread of his empire, Morley resists the urge to forecast when we might see signs of recovery. He simply says: &ldquo;Nobody knows. It is not worth wasting an awful lot of time worrying about that.&rdquo; <br /><br />Morley clearly thinks that getting the firm to focus on key areas and regions is the quickest way to grow the bottom line &ndash; which, of course, in business terms, is merely a case of getting from point A to point B.<br /><br /><strong>CV </strong> DAVID MORLEY<br /><br /><strong>Age:</strong> 53<br /><br /><strong>Work:</strong> Joined the firm as a trainee in 1980. Qualified as a solicitor in 1982. <br /><br />Made partner in 1988. Global head of banking in 1998. <br /><br />Elected managing partner in 2003. <br /><br />Elected senior partner 2008 to present.<br /><br />Education: Read law at St John&rsquo;s College, Cambridge.<br /><br /><strong>Family:</strong> Married with four children.<br /><br /><strong>Lives:</strong> Cobham, Surrey.<br /><br /><strong>Hobbies:</strong> Long distance cycling.