The "New Normal"

I have recently returned (after a number of years absence) to tutoring on the post-graduate Diploma in Professional Legal Practice. This is a year spent by students between getting their law degree and starting their traineeship and is designed to prepare them for the practical application of all their intellectual endeavours over the preceding years. It really is (in the main!) a delight to tutor (note: it is not supposed to be a “lecture”) what can best be described as “attentive, intelligent sponges”! As someone who regularly provides training to professionals (principally lawyers and accountants) I can say that it is a whole different experience to address an audience of students. Possibly, at their age, they still have a lot of memory left to soak up the pearls of wisdom but whilst this may be the “hardware” upside of their age, the downside is that they often lack the “software” (i.e., experience) to process the information, so it swills around inside their heads and needs to be tethered to something. This is where my fellow tutors, all experienced practitioners, and I come in.

My course is (surprise, surprise!) Corporate Law and, as you will appreciate, the practicalities of this is not something that it is easy to encapsulate in the current environment. I regularly have to bite my tongue before launching into what might be seen as a pessimistic analysis of this area of the profession. What I have realised is that just because the profession now is nothing like the profession that I joined, this is not necessarily a bad (or, indeed, a good!) thing, it is just a fact of life. I have no doubt that the profession that I entered was nothing like the profession when those who trained me entered it. I suspect, however, that the thirty years preceding my joining the profession saw nothing like the same amount of change as has been seen since 1987.

So, what is the point of this reflection on the profession, you ask? As I say in the title, we are constantly being told that the credit crunch and subsequent recession overthrew the old certainties and that we are now in the “new normal” or (perhaps more optimistically) we should not expect things to return to as they were before and that there will emerge a “new normal”, we’re just not there, yet. Is that not, however, always the case? Time changes everything, sometimes quickly (or radically) and sometimes slowly and incrementally, but things change. We are always moving towards a “new normal” and, by definition, that would mean that there is actually no “normal” at all. If that is the case, why stress about it and, more importantly, why wait for it?

This mind set encapsulates the same mentality that makes deflation such an insidious enemy of growth. Just as we seem at the moment to be waiting for things to improve, so we wait for the prices to fall – why spend now when we can possibly spend less, later? If we continue to wait for “normality” (even if it is this illusory “new normal”) we will not make any progress.

There have been many excuses for the current failure of the world economies to kick into gear – both macro and, in certain areas, micro. I think that it is time to accept that “risk” in general (of whatever nature) is a more apparent issue than it was ten years ago, but if we factor that into our analysis, it shouldn’t lead to paralysis. Nothing is risk-free, levels of risk may be higher now than they were, but that means that opportunities are greater than they were. The old adage (from US politics, where else) is: “to the victor goes the spoils”. This must, however, be preceded by: “fortune favours the brave”. You have to take risks to succeed.

Until we see a willingness to embrace risk in a controlled manner (not recklessly or in ignorance, as before the credit crunch), we will not see a return to sustainable growth. People seem to have forgotten that risk was seen as far more prevalent in the late eighties and the nineties than it was before the credit crunch. Risk was priced into calculations back then but, slowly, the perception was and then the orthodoxy became that risk was capable of being controlled, even ignored.

With that in mind, we should return to the “real normal”. Evolution tells us that both bad times and good times help mould the future of all organisms. Let’s return to what was an “old normal” and rediscover a healthy but not paranoid attention to risk. For those of us in the northern hemisphere, we are entering the season of renewal and re-birth. Spring is a time for casting off the old and returning to a season of growth. Let’s hope that this permeates the world economies in the next few months.

Until then, enjoy the green shoots of Spring!

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