Over the past 10 years, risk management has been a fixed item on the agenda of the management and supervisory boards of almost all somewhat larger organizations. Recently, ESG, diversity, inclusion and reputation management were added. The curious thing is that this does not yet seem to have penetrated as much into the world of consultants, accountants, lawyers and other ‘professional’ service providers. Yet they too are often organized in (medium) large organizations with many employees and large turnovers. Nevertheless, they often still seem to regard themselves as notable and unique service providers and not as a normal company that also has to keep up with today’s requirements in terms of corporate governance.

One can fantasize about what causes this effect (possibly a feeling of: “we can do it ourselves just fine, so internal supervision is not necessary”). You still regularly see someone from the professional group being put in charge of the management in this type of company: a medical doctor is the director of the hospital, an accountant of the accountancy firm and a lawyer is the ‘managing’ partner of a law firm. This is also the case when it comes to very large organizations with hundreds of employees. Among these professional groups there seems to be a distrust of directors who are not themselves doctors, accountants or lawyers. Apparently, there is a certain fear that other directors thank their like do not understand the nature of their special professional services sufficiently.

By now, it is becoming increasingly clear that this is a mindset from the last century. Old school.

The number of scandals and problems at large professional service firms seems to be increasing. This all has to do with lousy governance. And it often has major and far-reaching consequences, not only for the organization itself and its employees, but for the entire profession. After Enron, the ‘big five’ among accountants became the ‘big four’ because of failing internal governance at Arthur Anderson. The organization went bankrupt. The sum of the fines that top accountant KPMG has had to pay worldwide due to failing internal control and failing integrity (core values for an accountant!) amounts to many billions.

A few examples from the legal profession have recently drawn attention in the Dutch media. For example the embezzlement of eleven million Euros from clients of the reputable firm Pels Rijcken by managing partner Frank Oranje, himself being the figurehead of integrity. An investigation was launched by the dean of the Hague Bar Association (himself an attorney at law). This investigation was strongly criticized by the Regulator for the legal profession in February 2022 for alleged conflicts of interest. Voices are now being raised that the external supervision of lawyers should not be placed with the legal profession itself, but with an independent body.

The Financieele Dagblad reported on June 1, 2021, that all law firms in the Netherlands, as the “gatekeeper” of the financial system, had collectively filed not more than 21 AML-reports in 2020. At the banks, there were 245,000 and at the accountants 2,500. Little compliance, therefore, among lawyers.

An interview with nearly forty female lawyers working at (large) firms in Amsterdam (NRC, February 26, 2022) sketches a world of attorneys with exclusively ‘masculine’ values. The slightly less than fifty percent of women working there rarely reach the top: only one in five partners in al law firm is a woman. Having a family at the same time seems a tough or almost impossible challenge.

In early March 2022, the Houthoff firm was prominently featured as a Kremlin office on all front pages. After the invasion of Ukraine, the firm had announced that it would continue its (very profitable) services to the Russian Federation. A short time later it announced that it would not do so after all.

In short: failing internal supervision, failing compliance, failing risk management, failing diversity, failing inclusion, failing reputation management. It’s time for the professional consultants and advisors to put their hands in their own pockets.