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Reflections on a noble calling – Part II

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(Continued from March 29, 2011 Midweek edition)

by Rudolph O Baynes,
Rutherford, NJ.

Editor: Again, beware of a local attorney you consult who says he/she has another degree in Economics (say), or worse of all political science. What they have really learnt extra is all about macroeconomics, Adam Smith, John Stuart Mills, Maltus, Keynes’ General Theory etc. Nothing about FIFO, LIFO, Sum-of-the-years digits, even regression analysis.{{more}} In political science: subjects such as democracy, dictatorship, the history of the labor movement, labor relations etc. (moreso about countries other than the Caribbean) are unhelpful. Hardly anything about a balance sheet. Yet he/she will hold himself/herself out as a problem solver of the highest degree. Check him (her) out carefully.

Professor Kenneth Boulding who graduated with a first class honors in Economics from New College, Oxford, in 1929, and who taught at UWI between 1959 and 1960 once wrote a paper entitled “My Life Philosophy” in which he said: ‘After I was introduced to accounting by William Baxter, professor of Accounting at the London School of Economics, for the first time in my life I began to understand what a balance sheet was, which nobody ever told me at Oxford, or even Chicago’.

Herein lies some of the falsities of these degrees we wear on our sleeves in the Caribbean. Without some kind of experience beyond the class room, many of these flag-waving degree holders fail to obtain a practical understanding how the real world works, such as how to simply manage a bank with a mere $50M (EC) in assets (say). Sometimes I wonder about their capacity to balance a check book.

Obviously, Professor Boulding came to the balance sheet four years after earning his degree. Local attorneys with an additional degree in economics or political science may never have heard of the balance sheet because many would have never done serious work outside of their cloistered habitat. If they do, the question becomes: can they analyze what’s there?

There was a time I was fascinated with the designation “Queen’s Counsel” or “King’s Counsel”. Either depends on whether the reigning sovereign is male or female. Those on whom such designation is conferred occupy a place in the inner bar and secure the privilege of wearing a “silk” gown when appearing before a court of law. This designation is usually reserved for members of the profession of unimpeachable integrity and character, who have been in practice, I believe it is for at least fifteen years and who have achieved distinction in the practice of the craft. This honor is conferred by the Queen’s (or King’s) representative i.e. the Governor as the sovereign’s representative, acting on the recommendation of the Attorney-General as the official head of the local Bar and the Chief Justice as head of the Judiciary. Having studied serious cases that took place in Trinidad and Tobago in the fifties and sixties where there were famous lawyers such as Messrs Gaston Johnson QC, H O B Wooding QC, arguing on either sides of a case, impressed me with their oratory as I scramble to obtain the latest Trinidad Guardian newspaper that carried these cases verbatim. Then there was the famous case of The Karsote Co v The Vick Chemical Company in 1949 or thereabout. This was a trade mark case in which Norman Manley of the Jamaica Bar, as counsel for the Vick Company, had faced off against Sir Lennox O’Reilly, KC, then the doyen of the Trinidad Bar who came up to Jamaica to represent Karsote. At that hearing, Vick’s claim was rejected, later reversed, then argued before the Privy Council by Mr. Manley who faced off against two of the most eminent silks of the English Bar at that time, who specialized in trademark work, one of whom was Lord Upjohn, also a Lord of Appeal of the Ordinary against whom Mr. Manley argued the case before the Privy Council and won. As a result of that case, Mr. Manley was invited to receive silk. Because of that case, silk was earned as a result of hard work.

My disappointment with “silk” as conferred today is that the recipients need not argue serious cases, merely be recommended by the Queen’s representative, without being seriously vetted by their peers. Then all is well. Take the case of the late Tom Adams, a former Prime Minister of Barbados. Most of his years were spent in the UK where he was a frequent voice on the BBC program ‘Calling the Caribbean’. Notwithstanding his drug habit, what did he really do to obtain “silk”?

One of the most clever manoeuvres I know of, ever perpetrated by a local attorney, was his lobbying effort carried out to secure the consent of the board of a locally incorporated lending institution on which my father once sat, to pay for his legal services with newly minted shares issued by the company. It happened in the late forties, early fifties. It is to be noted that the father-in-law of this attorney also happened to be one of its founding members. This decision meant that each time there was an applicant for a loan, assuming the legal fee was $100.00 (say), at book value per share of $1.00 (assuming book value was used instead of market value) the lawyer would have received 100 shares. Mr. Baynes (Sir Rudy) who understood the consequences of shares-for-fee quit the board in disgust. Today, about two of its major shareholders, which include the beneficiaries of the attorney now deceased, own upwards of 33% of the company. No cash dividends have been paid out of earnings in years. Shareholders receive an annual compensation paid in shares in proportion to their holdings at the date of declaration. The board for the past number of years has been issuing only stock (share) dividends. Because of which, each year that stock (share) dividends are declared and paid out, the number of shares issued to the two major shareholders increase disproportionally in relation to holders of minority shares. For example, if the total number of shares outstanding was 100 and the company at the end of its operating year declared and paid a stock (share) dividend of say 30% of the income after taxes, a shareholder holding (say) 15 shares will receive proportionally more than one holding 10 shares. If this policy is adopted for a number of years, 33% easily becomes 51%. The law firm once owned by the deceased lawyer also continues to review and receive a fee for all loan applications made to the company. Clever, isn’t it?