In this exclusive interview, Eugene McCague, the former managing partner and chairman of Arthur Cox, talks about:

  • Advising on the examinership of the Goodman Group
  • How to become a partner in a blue-chip law firm
  • Advising Bank of Ireland’s Richie Boucher during the crash
  • Why law firms need to appoint partners much younger
  • How he became a partner of McCann Fitzgerald at 24, only to leave shortly after
  • His role in floating and selling Eircom
  • The strategy behind the Team Aer Lingus restructuring
  • His memories of the night of the guarantee

It is 1989, and the bright lights of Manhattan are beckoning. Not yet 30 but already a partner at Arthur Cox, Eugene McCague is set to take charge of the law firm’s burgeoning outpost in New York. Just married and starting a young family, it is a dream assignment for the young lawyer from Clones, a small border town in west Monaghan with a population of just 1,600 people.

In his mind’s eye, McCague is already visualising the boardroom summits in sparkling skyscrapers, the cocktail parties, even the belt-and-braces white-knuckle capitalism of Wall Street.

And then, weeks before he is due to leave, the golden ticket is set alight. The firm’s senior partners change tack, opting instead to install an American lawyer to manage its US operations. Nothing personal, they tell him, just business. McCague smiles on the outside, grimaces on the inside and carries on building up his practice waiting for his next big break.

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As it transpires, McCague does not have long to wait – in 1990, he gets a phone call that will change his career. It is Peter Fitzpatrick, a liquidator that McCague has worked with on a slew of small, yet sad, insolvencies across provincial Ireland, over the previous five or six years.

The Goodman Group, the beef processing behemoth controlled by Larry Goodman, is tethering on the edge of collapse. The government has introduced emergency legislation that could potentially protect the business from its creditors. Fitzpatrick is set to be the first examiner in the history of the state, and he wants McCague on board as his lawyer.

McCague would later joke with colleagues that, had he been instead tending to New York’s monied classes, some other chancer would have landed the gig of a lifetime. Instead, he was that chancer, and the experience of Goodman, the state’s largest every insolvency case at the time, would propel him into a career at the coalface of corporate life for the following three decades.

From Goodman, he would turn his attention to the UMP group of companies, a Galway meat business that had revenues of IR£250 million when it collapsed in 1991, leaving 600 people out of work. McCague was tasked with helping pick up the pieces.

Throughout his career, McCague became a doyen of Irish business, a man with a ringside career into the careening, schizophrenic personality of the Irish economy of over the last 30 years.

He worked on the hard-fought restructuring of Team Aer Lingus, helped demutualise First Active, floated Eircom and then advised on its sale to Vodafone. He was there on the night of the bank guarantee, advising the state, and spent much of the next decade as a confidante, counsellor and lawyer to Richie Boucher and the board of Bank of Ireland.   

During the bust, he was an insolvency lawyer. During the boom, he turned his hand at corporate finance. Even in retirement, he sits on the board member to a lengthy string of blue-chip corporates. Throughout his career, McCague became a doyen of Irish business, a man with a ringside career into the careening, schizophrenic personality of the Irish economy of over the last 30 years.

He has never told his story or given an in-depth interview. Until now.

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Eugene McCague: “I was 35 years at it. It was not a short career.” Photo: Bryan Meade

Eugene McCague may have never courted publicity, but he is certainly no recluse. A former debating champion during his years at UCD, he is highly sought after on the after-dinner speaking circuit where his mix of style, humour and intellectual heft, all delivered in a Monaghan baritone, goes down a treat. He now limits his public speaking commitments on the basis he puts too much time and effort writing, memorising and practising each speech in advance.

An amateur historian, he has published two biographies – one of Arthur Cox (“he was the auditor of four separate debating societies,” McCague tells me), and another on the businessman Kevin McCourt. 

“Like in sport, when you have been involved in big cases along the way, the beast within you wants big ones all the time.”

When we meet for our interview at Dublin’s Fitzwilliam Hotel, he is charming, insightful and witty. It is three years since he left Arthur Cox, a firm where he served both as managing partner and chairman. He can still use the firm’s offices if required, but he tends not to. Instead, his diary is littered with non-executive duties at a range of companies such as Aon, Fly Leasing and Appian Asset Management.

He left Arthur Cox in 2017, four years after he stepped down as chairman. He could, and initially planned on, staying longer, but ultimately decided against it.

“I have a much more structured life now. I am much more in control of my diary. Am I busy? Yes. But am I busy as ever? No. I am sitting with you and I am not checking my phone. Three years ago, I would have been taking calls. Richie Boucher would be looking for me, and I would probably have to go. Now, I can enjoy my coffee,” he says.

“I was 35 years at it. It was not a short career. You get to the point where you don’t want to fill out any more time sheets or have discussions with the finance director about work in progress. Like in sport, when you have been involved in big cases along the way, the beast within you wants big ones all the time.”

The 1980s: liquidating the backbone of provincial Ireland

Eugene McCague’s father died when he was just six weeks old, leaving his mother to raise four young children. She had worked as a conveyancing clerk at a solicitor’s office in Clones but left after she got married. After her husband’s death, she returned to her old job. 

“My mother would have been a great solicitor,” McCague says. “But she had four young children, could not drive, the exams were up in Dublin, so she became a clerk. After school every day, I would go and sit in the office. For some reason, I fancied it. My mother probably fancied me being a doctor or a dentist, but I was a bit squeamish. I put law first on my list – it was easy to get into anything in those days – and off I went.”

After college, McCague took the familiar path into a major law firm. McCann, Fitzgerald, Roche and Dudley, one of the largest firms in the country, received four applications for four places in 1979, and McCague was one of them. Much of his apprenticeship was spent on insolvency cases, touring the country attending creditors’ meetings. He qualified in 1982 and was a partner two years later.

“People did not normally leave McCanns to go to a small firm, but I wanted to try it.”

While inconceivable today, such a rapid rise was not unknown in the early 1980s when the partnership structure operated differently, and advancement came earlier (the subject of youth promotion and career progression is something that McCague touches on multiple times throughout our interview). Shortly afterwards, however, McCague, by his own admission “young and feckless”, decided to abandon the rarefied altitude of the country’s biggest firm to join a small practice specialising in insolvency.

Esmond Reilly was located on a residential terrace in the Dublin suburb of Rathmines but had carved out a lucrative niche on banking and liquidations. It was 1984 and he was just 25 years old. “People did not normally leave McCanns to go to a small firm, but I wanted to try it. I went there and spent two and a half years there. It was full-time insolvency,” he says.

Three years later, he was on the move again. Arthur Cox was landing all the big insolvency cases such as PMPA but had no specialist insolvency lawyers. McCague was a specialist insolvency lawyer who had no big cases. A senior partner with the firm, Denis Bergin, spotted the synergy and put the two together. He joined in 1987 and was installed as a full partner one year later.

“What was very sad about those days was that an awful lot of the companies that went bust in the eighties were emblematic of the towns they were in.”

“I think the truth is that big cases were going to big firms. After a while, you want to be in the big cases. I mean I had a very good practice in the mid-sized cases, but I wanted to be in the big cases,” he says.

As we speak, McCague runs through some of the businesses he helped liquidate during the 1980s, a time when economic growth was stubbornly low and unemployment and immigration depressingly high. It is a roll call of traditional businesses that backboned provincial Ireland – textile factories, woollen mills, manufacturing, paper plants.

Many were undone by changing industrial patters; others by soured relations between employers and employees. “What was very sad about those days was that an awful lot of the companies that went bust in the eighties were emblematic of the towns they were in,” he says.

“Companies like Hills of Lucan, Goodbodys of Clara. Keenans of Bagenalstown. They were the main businesses in the places. Keenans of Bagenalstown was particularly sad. Bernard Somers was the liquidator and it closed down just before Christmas. It was an interesting time. There were endless creditors’ meetings; I was probably going to four or five creditors’ meetings a week.

“A lot were in industries that were dissipating. Then there were companies that had big industrial relations problems. Ranks, the paper mill, went in 1983 and there was a sit-in. From a professional point of view, it was the place to be. There was not much point being a conveyancer or in corporate finance.”

However, the biggest corporate calamity was yet to come. That would require Saddam Hussain to invade Kuwait, a move that would provoke international sanctions in Iraq, including money due to be paid to an Irish beef baron.

Promoting partners, and the future of the legal profession

“In my view, it will have to go back to creating more lawyers and promoting them younger, or else firms will struggle.”

As a former chairman and managing partner of one of the country’s largest firms, McCague has long been a scholar of the legal profession. Since his retirement, however, he has been thinking more and more about the future of the profession itself.

When he joined Arthur Cox in 1987, the firm had 19 partners plus a further 20 lawyers. By the time he left, its total headcount was in the region of 800. In 1982, the so-called big five firms had 156 solicitors between them. Today, the top six each have more than 200 lawyers, while the next five have more than 100 lawyers each.

In 1982, 5.7 per cent of the profession were in the big five. Today that number has ballooned to 14.5 per cent, with a further 20 per cent in the second tier. The growth of large-scale commercial law firms has been exponential.

“In my view, it will have to go back to creating more lawyers and promoting them younger or else firms will struggle.”

And, with firms chasing expansion, the battle to recruit top talent has never been more intense. To come out on top in the talent war, McCague believes that law firms will have to change the career model for lawyers, allowing them to progress up the ranks far faster than at present.

“I am a firm believer that if you are good enough, you are old enough. I was a beneficiary of that mentality very early in my career. Certainly, in the early 2000s, we promoted a lot of people relatively early. We made a lot of partners. We made some mistakes. But we promoted a lot of people and because they were promoted, they needed more people to work for them. The numbers grew. The practice grew,” he says.

“In my view, it will have to go back to creating more lawyers and promoting them younger or else firms will struggle.”

McCague acknowledges freely that he is something of a lone voice in the debate. But he argues that structural change is required if you want to ensure people stay within the law firms and do not defect other sectors, companies or industries.

“There are so many high quality, well-paid in house jobs now compared to when I started. You have the banks. You have the multinationals. AIB has more than 100 lawyers. The Central Bank has more than 100 lawyers. The other big one is aircraft leasing. They are taking a lot of talent. They pay very well. They give an interesting career. You do a bit of commercial, direct contract. If you are a young fellow or getting married, you can get a 50 per cent uplift in salary. The in-house thing is a big challenge. I think there are 50 people from Arthur Cox working in the Central Bank. Two were partners, junior partners, but still. There is a lot of movement,” according to McCague.

“If you look at millennials, showing a career path that says you have a title in ten years’ time, they are looking three years out. Something has to give. Firms should not be so rigid.”

McCague also believes the profession needs to cater for a new generation of lawyers, who don’t necessarily aspire to be lifers at a firm. A major company does not care about age; but professional firms have got into it. It is all well intentioned, but in some cases, it is crowd control. Because you have so many people. I do think the structures will have to change,” he says.

“In my day, you qualified when you were 22 or 23. Nowadays, you qualify when you are 26. Transition year. A four-year degree. A masters. You have gone to Australia. You train. In reality, you are not going to be made a partner in most of the big firms for seven or eight years, probably ten years. Then, you are expected to retire at 60. The career is getting shorter and shorter. I think firms are going to have to look at that structure. If you look at millennials, showing a career path that says you have a title in ten years’ time, they are looking three years out. Something has to give. Firms should not be so rigid.”

*****

How to become a partner of a law firm… in 57 words  

“You need a business case and you need a sponsor within the firm. You need someone to help. That is the reality. And then you need to convince endless committees and people. It is a structured approach. But you go through the business case. And you need to have someone who is backing you. That is key.”

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The 1990s: Goodman, Team Aer Lingus and a boomtime reinvention as a corporate financier

Ian Kehoe (IK): You mentioned you got a call from the liquidator Peter Fitzpatrick asking you to work on the Goodman examinership. What was that like?

Eugene McCague (EMcC): It was a fascinating case. It was a three-month process with the possibility of another month, and it ran the full four months. It ran from August 24 to December 29, 1990. There were 33 banks, all unsecured. Most of which did not know how many other banks were involved. There were no personal guarantees and there was new legislation. Suddenly banks who were used to being able to appoint receivers had all their rights taken away. It was absolutely fascinating.

IK: There must have been a sense of the unknown about it? The legislation has been rushed in. No one really knew the nuances of the legislation. You had to navigate that and an awful lot of creditors.

EMcC: I was 31 when I got that. Even by modern days, it was long hours. There was a new piece of legislation overnight. We were in before Judge Hamilton the following day applying for permission to borrow IR£25 million. We did not have it sourced, but that was what was needed for the working capital.

IK: How did the team manage to piece the deal together?

EMcC: A lot of it was driven by the fact that all of the banks were in the same class, they had to co-operate. A lot of the reasons it was in trouble was because Saddam Hussain had invaded Kuwait and money from Iraq was not available. That was the approximate reason for it. It was a good business and it has proven to be.

“The Celtic Tiger came along and insolvency practitioners were in trouble. So in 1996, I seamlessly reappeared as a corporate finance lawyer.”

IK: After that, you were involved in a number of other high-profile cases. What sticks out for you?

EMcC: That set me off. I stayed in insolvency for a number of years after that. I did UMP, a meat company that did not work as an examinership and which became a receivership.

Team Aer Lingus was very interesting. What happened in Team Aer Lingus was that Aer Lingus had permission to put money into Team Aer Lingus; there was state aid money coming in and the unions rejected a Labour Court recommendation. Gary McGann had just become chief executive of Aer Lingus. Bernie Cahill was the chairman and Brian Cowen was the minister.

They were three robust people and between them and myself and some other people, we decided we should put it into examinership. We put the late Hugh Cooney as interim examiner. Within eight days, the unions re-balloted and voted in favour of the Labour Court and then we took it back out. That was 1994. I found the strategy really interesting.

IK: In the mid to late 1990s, the economy started to turn. The cases must have started drying up?

EMcC: The Celtic Tiger came along and insolvency practitioners were in trouble. So in 1996, I seamlessly reappeared as a corporate finance lawyer.

I worked as second in command with James O’Dwyer in the office on things like the Eircom strategic alliance, which led into the Eircom Esot, which led into the IPO, which led to the sale to Vodafone. I did those, and I also helped on the conversion of First Active from a building society into a company. They were in the late 1990s, so that kept me going.

*****

Eugene McCague is sitting in a boardroom as a legal adviser to a major Irish corporate. He has done it on countless occasions, a wily lawyer drafted on by a chairman to counsel on contested matters.

Gary McGann, the businessman, is in the chair. A board member asks for the view from Arthur Cox on an issue. McCague, remembering the training of his mentor James O’Dwyer, remains both still and silent. The other board members weigh in and the issue defuses itself. The meeting rambles on, and still McCague stays completely silent.

At the end of the meeting, McCann calls McCague aside, saying he was impressed McCague had managed to remain absolutely silent throughout the entire meeting. McCague responds that he gets paid the same for doing nothing as he does for doing something. “In your case, you should charge double,” McGann replies.

*****

The 2000s: boom, bust and recovery

“In October 2007, I acted for Hypo Real Estate buying Depfa Bank for €5.7 billion. Eleven months later we were trying to flog it for a euro.”

In 1999, McCague became managing partner of Arthur Cox. There was an election. But he stood unopposed. Interestingly, the firm, despite its rich history, had only installed the managing partner regime eight years previously. Prior to that, James O’Dwyer has been the senior partner, driving the business, but without the title. Ian Scott was the firm’s first managing partner. McCague became the second.

The economy was beginning to erupt and boom, and McCague’s main role was sourcing and enticing lawyers to help sate the demand of clients. The previous ten years had seen the rise of the IFSC, pension law and competition law. At the turn of the century, there were now two growth areas – e-commerce and Public Private Partnerships (PPPs).

“The great thing about law is that it keeps on creating new specialisms, so every time you think you are out of business something new comes along,” he tells me. “I ended up recruiting people from Australia; they were fantastic lawyers. They had experience in PPPs and rail – they advised the department on the Luas and others on energy law. Deregulation was happening in those days.”

He served his four-year term, but rebuffed encouragement to run again. Instead, he handed over the baton to Padraig O’Riordan, and went back into practice.

IK: What area did you return to?

EMcC: I did the IPO of Aer Lingus, the sale of the Great Southern Hotels for the DAA. Then the crisis came, and I reinvented myself as an insolvency lawyer.

IK: When did you know something was going wrong in the banks?

EMcC: I got a call from a fella in 2008 from a bank. He said that he understood I was around from the last recession. I said I was, and he said I was the man he needed. He was due to my house two days later. He did not turn up, so I called the bank. They said he was no longer with the bank. Gone in two days.

IK: Who was he?

EMcC: I can’t say.

“My career with the state was just six days. But it did encompass the night of the guarantee.”

IK: You were also there on the night of the guarantee, advising the state. Tell me about that.

EMcC: Padraig [O’Riordan] got a call from the government on the night of the guarantee. He was advising the state on Anglo and Irish Nationwide. David Doyle, the secretary general of finance, someone asked me to go into this meeting. As I was walking in, he asked me if I had a problem with AIB or Bank of Ireland. I said yes, we act with Bank of Ireland. He said we may be seeing them later on too. We thought it was just Anglo and Nationwide. It was only as late as that that we knew they were going to be involved.

I had to pull out after that due to Bank of Ireland. My career with the state was just six days. But it did encompass the night of the guarantee. I genuinely was not knowing that the other banks would have any involvement in it.

IK: Well, everything was moving so quickly at the time.

EMcC: In October 2007, I acted for Hypo Real Estate buying Depfa Bank for €5.7 billion. Eleven months later we were trying to flog it for a euro.

“I understand in the febrile atmosphere that was around at the time. If you were a banker or a lawyer, you were never going to be handed out gold stars for what you were doing.”

IK: Most of your work during the crash was with Bank of Ireland. What was that like?

EMcC: I hold people like Richie Boucher in the highest regard. The sheer focus was amazing. He said that he had got money from the taxpayer and he had to pay it back. I was in those rooms for very, very, very long hours over many months – the relentlessness of the focus and the ability to keep going was amazing for those people.

I understand in the febrile atmosphere that was around at the time. If you were a banker or a lawyer, you were never going to be handed out gold stars for what you were doing. But at the same time, there were some who kept at it and Richie was one of those.

IK: Who else do you admire?

EMcC: James O’Dwyer was one of mentors. Gary McGann is a font of wisdom. I like people who take advice. I never advised him, but Larry Goodman takes advice.

IK: What do you think the lessons of the crash are?

EMcC: I think the concept of a soft landing was genuinely held; I don’t think people looked at the morass and thought it would be as bad as it was going to be. I think they all had modelled it in a particular way. There were huge amounts of wholesale funding around and debt facilities. People had modelled on borrowing short and lending long; it was great once you did not have to pay it back.

The lesson on the retail side was that there was bad lending done to individuals. People on modest incomes who were given multiples and 100 per cent mortgages and so on. I have to be honest and say it has swung too far the other way. You now have a situation where people can’t get a mortgage at the scale of the rent they are already paying in Dublin. You have to wonder has it gone too far.

Has the role of a lawyer changed?

“I don’t think it has really changed much. If anything, at the younger levels, it has regressed. When I was coming through, you got more responsibility and direct access to clients at a younger age. What has changed with technology and emails and conference calls and so on, the actual interaction has changed. I think there will be at the senior level, the wise councillor, the business partner or whatever phrase you want to use. But if you go back to Arthur Cox himself or Alexis Fitzgerald of McCann Fitzgerald, they were absolutely wise councillors who people relied upon. There are still some now, but it just takes longer to get to that point now.”

The chairman: the rise and rise of Arthur Cox

IK: You were chair of Arthur Cox between 2006 and 2013. What is the difference between that and managing partner?

EMcC: The chairman is Arthur Cox is the chairman of a public company. You are a non-executive chairman and you do client work as well. You chair the partner meetings and deal with partner issues. The managing partner deals with the business and business issues. It works well. It is good governance. I joke that depending on the day, running the partners can be more difficult than running the business.

IK: What was behind the company’s growth from the time you joined to today?

EMcC: Success breeds success. They put in a very good trainee recruitment programme. They got good people. If you get the best people from Trinity or UCC or Galway one year, then the people coming up the following year want to follow. It became self-fulfilling. They really worked hard at it. All the interviews were done by partners, all the job offers were made partners. As managing partner, I was phoning apprentices, and their mothers, asking them to join. I think we got ahead on that.

“The brand is important. A lot of it is reputation. You can wine and dine and so on. That is a mark of thanks. But you don’t get business that way.”

IK: Lots of companies get to the top but struggle staying there. How has Arthur Cox managed this?

EMcC: You have to stay number one, or at worst number two, in every core area. You have to keep looking at all the core areas. You won’t be number one in corporate finance or M&A, if you are number four in employment. Or if you are number four in pensions. You have to be at the top in every area. If you have areas where you are not one or two, you have to go out and buy. Arthur Cox and others have done that. That is what you have to do.

IK: What is the key to landing the right clients?

EMcC: The brand is important. A lot of it is reputation. You can wine and dine and so on. That is a mark of thanks. But you don’t get business that way. You get it by reputation, and by knowing people. I had a client that I knew socially for 11 years and then no work. In the last four years of my career, I got a lot of work.

*****

Pride of place in McCague’s Dublin home is a grandfather clock, manufactured in his hometown of Clones. Our photographer immediately spots it, and McCague happily stands before it for a shot, a piece of constant recollection of his youth in Monaghan. A colleague spotted in in a shop in Dublin, and McCague quickly cut a cheque and brought it home. It is one of only a small number ever made and still in use, he says.  

Towards the end of our interview, McCague tells me he misses the cut and thrust of the deal and corporate life, but not the relentless nature of the profession, particularly now, when technology ensures constant contact between solicitor and client.

“It can become very relentless, particularly when your children are small and you have to get to the school plays and the like,” he says. “Eircom could be having a crisis and you need to get to see your six-year-old in the play. There were times when you were not sure if you could go on holiday. It puts stress on your family. You are trying to prove yourself.”

Does he have a blueprint for retirement? “I have no master plan,” he says. “I am happy with what I am doing.”