Robert Morfee has over 40 years' experience in dispute resolution and has specialised for the last 15 years almost exclusively in financial services, pensions, investments for small businesses and private clients.
Say the word “psychopath” and it conjures up the image of a monstrous murderer wielding a blood-stained axe. The kind of psychopaths that I encounter in my work wear suits and may not be criminals at all, although they often are in their own way.
Psychopathy is a personality disorder characterised by antisocial behaviour, lack of empathy, and lack of remorse, but considerable charm. Psychologists study it, of course, but it is, I understand, not a treatable illness as such. A Canadian psychologist, Robert Hare, came up with a widely recognised list of 20 pscychopathic items called the PCL-R psychopathy checklist. The characteristics in his list which were shown by the psychopaths in my professional life are: - glib and superficial charm, grandiose self-worth, lying, cunning and manipulation, lack of remorse or guilt, callousness, parasitic lifestyle, sexual promiscuity and a lack of realistic long term goals.
As a litigation solicitor specialising in financial services, I come across people with these characteristics quite often. The world of financial services suits the glib, the charming, the manipulative and the greedy.
The last two big cases I have dealt with have involved what are commonly called “Ponzi” schemes. These are schemes where investors are tricked into parting with money into an investment which survives only because early investors’ returns are funded out of later investors’ investments with the fraudsters taking some of the money. There is no long term future for any such investment; it will collapse eventually. But the psychopath does not plan long term; he enjoys the grandiose lifestyle, the Rolls Royces, the Bentleys, the Aston Martins, expensive holidays, etc., while the good times last. Then it collapses.
The conduct of litigation against such defendants can be difficult. The investors who are tricked by them are often affected by what called “endowment bias”. In other words, they believe that because they chose the investment, it must necessarily be a good one. Therefore, they are very reluctant to admit that they have been conned and are often slow to sue. They may even be persuaded to condemn those who sue on the grounds that they are spoiling the “investment”. Such was the case with Equitable Life, where most policyholders were persuaded not to sue Equitable. In the end, Equitable’s provision for misselling compensation was not all needed.
The defence in such a case will often appear ridiculous to the outsider. For example, in one case I sued a firm of stockbrokers (now wound up) on behalf of an investor who had given them a mandate to invest in corporate bonds issued by European banks. Because he was offshore, he had a UK agent to approve the deals. The agent was suborned by the fraudulent stockbroker and authorised the stockbroker to buy, instead of good quality corporate bonds, a share in a portfolio of life insurance policies located in an offshore jurisdiction. Astonishingly, the defence alleged that was a proper investment, although obviously in breach of the mandate. They knew that the investor’s agent had no authority to change the mandate. The defence was a fantastic concoction which obviously could not survive scrutiny, but yet it was solemnly put forward by solicitors on behalf of the stockbrokers.
From time to time various worthies in the political establishment and lobbyists for the insurance industry say that litigation should be unnecessary and disputes should be resolved by mediation. They forget entirely that at the back of many lawsuits is a disordered personality. You can’t negotiate sensibly with a psychopath. The civil courts deal with crime too. It’s just that it is not always labelled as such.
Psychopaths are often successful businessmen. Companies are far too easily taken in by glib, superficial, polished performance. Corporate life favours the man or woman who spins a good story. It is a world where actual worth does not count quite as much as it should, but image a good deal more than it should. We do see, therefore, listed PLCs in the hands of people with very poor ethical standards. Also affected, it has to be said, are some big professional firms.
Take a cynical look at any proposition. If it looks too good to be true, then it may not be true at all.
About the Author
Robert has over 40 years' experience in dispute resolution and has specialised for the last 15 years almost exclusively in financial services, pensions, investments for small businesses and private clients.