March of the Dunces?

In yesterday’s Wall Street Journal‘s Law Blog, Elizabeth Wurtzel examines how over-worked and over-paid corporate lawyers enabled the Wall Street bankers, and thereby  co-created the current financial crises.  Her observations are below, and I couldn’t agree more.

Millions of hours of manpower put in by investment bankers on Wall Street and the lawyers who enabled them — the kind that brought home those bright shiny bonuses that are now causing a populist uprising in the hinterlands — have been wasted away by what is kindly called the credit crisis. . . .

[T]he traditional life of a law lackey . . . has meant virtual residence at the firm. Meals were delivered by Seamless Web and the roll-top desk was used for catnaps, because whatever it is that had to happen had to happen immediately, or yesterday. The emergency-room atmosphere that permeated the processing of derivatives deals, corporate takeovers, and whatever else has been going on at Goldman, Bear, Citi and Merrill for the past decade, could rival that of an operating room during open-heart surgery. Only, of course, it was a matter of money — not life or death.

Perhaps money and mortality are all the same to some. But as a way of making the former, this hysterical ER-approach has proved futile. All those lost nights of sleep are now lost 401(k)s. So what was the point? Corporate lawyers could have been sunning in St. Bart’s and ended up with the exact same result, plus a tan.

. . . I don’t believe any of the major players are re-evaluating their ethos — only their decision to invest in subprime mortgages. And this is foolish, since the problem is not just that the financial instruments were bad bets, but that the corporate structure and the feverish rush of it all are fundamentally flawed.

I would love to call the system despicable or detestable or something evil-sounding, but that would be giving it too much credit. It’s really just the march of dunces.

I would add that in order to prevent this type of phenomenon from recurring, many lawyers need to step outside their air-conditioned skyscrapers and experience a bit of more of “real life” before they mindlessly mastermind the next financial-or-whatever apocalypse.

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