Why it's a better time to be a lawyer than a chef

Given the choice would you rather be a lawyer or a restauranteur? James Nathan, winner of this year's fabulously addictive Masterchef, clearly fancies the latter: he gave up a career as a barrister to follow his dream and is now telling anyone who fancies listening that he hopes his win will soon lead to him owning and running his own place.

It may happen one-time winner Thomasina Miers now has her own Mexican restaurant but I suspect that the next few years are going to be rather better for lawyers than for chefs.

The UK consumer is finally capitulating: more of us are paying back money on our credit cards than borrowing on them and the consumption numbers are beginning to reflect falling confidence. And there is no longer any pretending that the top end is immune: with many forecasting a good 10,000 jobs to go in the City and the markets a mess, spending is already falling in overpriced shops across the capital.

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At a private view of vintage furniture the other day I asked the gallery owner how things were going, as I do every time I see him (this kind of thing being a great barometer of the confidence levels of the middle rich). In the past he has always without fail replied "great." This time? "Slow." None of this bodes well for the kind of restaurants I imagine Nathan fancies running.

But for lawyers? Things have never looked better. For starters most of the 10,000 who lose their jobs will instantly call a employment lawyer before they accept redundancy. Then there are all the repossessions and corporate bankrupcies to be vultured over (lawyers are involved at every stage of this kind of thing) to say nothing of the mis-selling scandals that are bound to emerge from the lax lending standards of the last few years and the cavalier promises made by the more exploitative of the buy to let clubs that have prospered during the property bubble.

The next bonanza will come from the suing of all the investment banks by the clients sold dodgy debt over the last few years (this kicked off last week with HSH Nordbank suing UBS for selling them high risk collateralised debt obligations when they thought they were buying something that would cause them no bother at all).

Then there are the hedge funds. It is hard for observers not to be mildly amused by the collapse of hedge fund Peloton this week not least because it reminds us all of how one of the founder's secretaries managed to nick a couple of million quid off him a few years ago without him noticing - but imagine how irritated the investors must be.

People pay very high fees to be in hedge funds on the understanding that they will get access to a magic formula made up of solid positive performance and relatively low correlation to the market as a whole (that's supposed to be the joy of shorting and of leverage). But as the Peloton shows, it often doesn't work out like that. Instead leverage and Peloton was leveraged four or five times - means that when things go wrong they go horribly wrong.

In the worst possible long-only fund you are unlikely to ever lose say 30-40% in a year. In the worst hedge fund you lose everything. Then you sue. If I was a chef who knew how to be a lawyer and I wanted to get rich in a hurry I'd hang up my apron right now and head for the City.

First published in The Evening Standard 4/3/08