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City monopolies: Back-covering is hurting entrepreneurs in the Square Mile

 (ES Composte)
(ES Composte)

SO, a friend in public relations was having a moan. He’d just done a pitch, and thought it went well. Then he’d heard that the senior institutional NED was asking why they were not using Brunswick?

Let’s be clear, before Sir Alan Parker gets on the blower, I’ve got nothing against Brunswick, always liked him, always liked them in fact, always found them helpful and quick (that’s enough Brunswick puffery, Ed.). But I do wonder how supposedly intelligent City folk who regard themselves as sophisticated and choosy in other aspects of their lives, allow themselves to sink into big name inertia.

In PR, as far as the City institutions are concerned, Brunswick, Finsbury and FTI must be on the ticket somewhere. In law, perm one from the Magic Circle or you’re nobody: Linklaters, Freshfields, Slaughter and May, Clifford Chance, Allen & Overy. In auditing, it has to be a member of the Big Four: Ernst & Young, PwC, Deloitte, KPMG. In management consultancy it must be either McKinsey, Bain or Boston.

It’s a back covering exercise, of course it is. The modern City is supposed to be a hugely energetic, entrepreneurial place, where meritocracy prevails and the best idea wins. But much of the activity that takes place there is stitched up at the outset, so the new upstart, the one that is brimming with dynamism and may have the best proposal, does not receive a look-in. This can’t in the long-run be good for the clients or for the development of Britain’s enterprise society.

It doesn’t make sense, to rule out others who may be more talented (sorry Sir Alan, I know that’s impossible, but now and again…) and have fresh approaches and get this, are hungrier and provide greater value for money. Apparently, though, while defying reason it’s completely acceptable.

While lesser firms find themselves clamouring for business, the hallowed elite are able to pick and choose - they get the brief a lot of the time just by virtue of being. What a glorious position to have attained.

The nonsensical nature reminds me of my pal in tech who I introduced to a firm that was looking to revamp its website. The m-d loved him, thought he was great. “But we can’t use him, I can’t put him to the board.” When I inquired why not, he replied, “He’s charging too little.” My friend was quoting £10,000. The m-d said the gig was his, “if he puts a nought on the end.” My chum, who was principled about these things (I know, daft or what) refused. That was his fee, he was sticking to it. I did suggest he could bill for £100,000 and give £90,000 to charity, but he wasn’t having it.

Coming back to the monopolies enjoyed by the few, it’s time the many kicked up. The sheer laziness that says it’s Other People’s Money, who cares if it’s not being spent in the most profitable, efficient manner possible, that has to stop.

There’s a case, surely for the Competition and Markets Authority poking its nose in. Can you imagine, the twisting and turning that would occur, as the Magic Circle law firms and Big Four accountants try and seriously explain why they should go by the monikers of Magic Circle and Big Four, what those words actually mean? It would be a joy to observe their squirming and protesting. They must not be too rude about the rest, but at the same time, they wouldn’t half try.

It’s not right, yet it’s tolerated. Worse, it’s actively encouraged. Government departments are as guilty as anywhere of only picking their consultants from the same small group. As I read the other day, no one was ever fired for hiring McKinsey.

Trying to cheer up my despondent PR mate, I said in future he could just refuse. He said, what do you mean? I said, “say no, you’re not going to tender.” No, he replied, he couldn’t do that. There would always be another agency that would take their place. No, he sighed, he would carry on. There was a glimmer in his eye. “If you don’t go for it, you don’t have a chance. You’ve got to hope.”

Chris Blackhurst is the author of Too Big To Jail: Inside HSBC, the Mexican drug cartels and the greatest banking scandal of the century (Macmillan)