Top Law Firms Emerging as Winners in Financial Meltdown
The country may be slipping into recession, but its boom time for a growing number of attorneys as the bailout is creating no shortage of work for a number of top firms. While the New York Times reports that a number of law firms are in fact cutting back and trimming their ranks, top bankruptcy attorneys, high-powered defense lawyers and regulatory law experts are emerging as winners in the financial meltdown. According to the NYT, firms that have cut jobs say, “the problem is simply that they have too many people with the wrong kinds of expertise at the wrong time.” Meanwhile, a select group of top firms are experiencing a deluge of litigation work since the crisis began, advising investors and lenders on their positions with troubled institutions and on a range of other bankruptcy related issues. In fact, International law firm, Fulbright & Jaworski’s 5th annual Litigation Trends Survey finds that 43% of corporate counsel surveyed expect an upswing in lawsuits, largely spurred by economic crises. Reuters quotes Fred Krebs, President of the Association of Corporate Counsel, as saying, “Everybody is going to be affected. To the extent there have been these meltdowns, there is going to be litigation.”
Executive search firm, A.E. Feldman, says legal jobs may open up as law firms brace for an anticipated onslaught of bankruptcies and litigation, as well as new regulation. Many firms are also taking action, establishing financial crisis task forces, to help their clients make sense and survive one of the most significant events in the history of the U.S. economy, says A.E. Feldman’s President, Mitch Feldman. Feldman also notes, “The issues these task forces seek to address can dramatically impact their clients’ bottom lines. This is critically important in today’s business climate.” Among the experts in greatest demand will be litigation, bankruptcy, restructuring and white-collar criminal defense attorneys as companies grapple with an array of problems. Compliance attorneys may also see growing demand as financial institutions brace for a myriad of new regulations.
Aside from lawsuits against lenders, a growing number of attorneys are providing counsel for companies that are downsizing or have been pushed into bankruptcy. Firms are representing clients in fraud lawsuits against banks and Wall Street investment firms and guiding distressed banks seeking a piece of the $700 billion government rescue package for the financial system, reports The Chicago Tribune.
The Tribune quotes Karen Garrett, Head of the Financial Institution Regulatory Practice for the Bryan Cave law office in Kansas City, as saying, “From here on out, we’re going to see huge opportunity as credit fans out and everyone tries to use the tools available from recent legislation.”
Reuters quotes Jerry Kowalski, Co-Founder of legal consultant Kowalski & Associates in New York as suggesting that some firms will be seeing record years for 2008 and 2009. In fact, Sullivan & Cromwell LLP’s H. Rodgin Cohen, who has advised a number of banks on bailout-related issues, told Reuters business has exploded. “It’s been extremely busy. Probably over six, seven weeks of time, it’s the busiest time we’ve ever seen,” he said.
Fulbright & Jaworski’s Litigation Trends Survey, which polled 358 in-house attorneys from corporate law departments in the United States and United Kingdom, shows that 43% of the corporate attorneys polled anticipate a surge in lawsuits resulting from the economic crises. (In contrast, only 22% surveyed in 2007 said they expected an increase in legal disputes for their company in the 12 months ahead.) The banking crisis, credit squeeze and subprime market problems are all expected to help fuel various forms of litigations, according to the survey.
“This year’s survey appears to mark an inflection point for American business, between the end of a prolonged period of prosperity and the start of a period of economic challenge that is likely to fuel litigation over who is to blame and who should pay for the consequences,” said Stephen C. Dillard, Chairman of Fulbright’s Global Litigation Practice.
Moreover, a recent Forbes report calls the surge in legal work, “a fishing expedition likely to yield enough evidence of impropriety for prosecutors to charge a handful of bad guys for fueling the sudden implosion of financial markets–and set off an inevitable tidal wave of shareholder lawsuits brought against nearly every major financial institution.”
Even before the current crisis, the number of securities class-action suits filed during the first half of the year rose by more than 100% over the same period a year ago, according to Forbes, citing a recent report by Stanford Law School Securities Class Action Clearinghouse. The report also notes that so-called “mega-lawsuits” nearly tripled in the first half of the year as a result of the credit crisis and extreme market volatility.
The Lehman meltdown alone is poised to churn out the biggest fees ever in a bankruptcy, said Lynn LoPucki, Law Professor at UCLA and Harvard University, reports Reuters. He estimates that court-awarded fees from the Lehman case could total about $900 million.
Forbes quotes Samuel Rudman, Partner at New York-based plaintiffs firm Coughlin, Stoia, Geller, Rudman & Robbins, as saying, “This is certainly a major litigation event. There has already been a lot of lawsuits brought in connection with subprime mortgages, and there are going to be a lot more. If you’re a litigator, you’re busy and probably will be for a while.”
Meanwhile, as the financial crisis continues to unfold, a number of top law firms are working to create crisis groups. Law firms with banking and finance practices that were recently making deals with free-flowing credit are now scrambling to launch new practice groups to help clients simply survive the credit crisis, according to Law.com.
Law.com quotes Pat Oxford, Chairman of Bracewell & Giuliani and Head of the Houston firm’s new financial industry task force, as saying the ripples of collapsing financial institutions are already reaching Bracewell practice areas ranging from white-collar crime to banking, securities, transactions and many more. “The basic architecture of our banking regulatory scheme will change. There are hedge funds and private equity funds that, if you squint your eyes, look like investment banks. We suspect there will be a tsunami of regulation,” he says.
International law firm, Proskauer, recently announced the formation of a multi-disciplinary response group to advise and respond to clients affected by the current turmoil in the world’s financial markets as well as monitor, analyze and disseminate information on new developments as they arise.
“The current cycle of massive de-leveraging, institutional stress and government intervention in the world’s financial markets is advancing at a frantic pace, making it imperative for businesses to have counsel who are integrating their resources to not only provide advice on how to proceed through this crisis, but how to anticipate problems and protect themselves as disputes and conflicts arise,” said Stephen L. Ratner, Co-Head of Proskauer’s Financial Services Practice. “This initiative also encompasses our litigation capabilities, particularly as they pertain to complex financial instruments and transactions, as well as a broad range of other areas such as corporate governance and defense, insurance coverage, reductions in force and other employment and benefit-related issues, securities regulation and bankruptcy and restructuring matters.”
Briggs and Morgan also announced it has launched a multi-disciplinary market crisis response team. The firm says the U.S. and European government’s massive legislative and policy initiatives, including the $700-billion rescue plan, Recovery Refinancing Programs, Bank/Dealer Lending Programs and Securities/Loans Purchaser Programs, have created a host of both issues and opportunities for financial institutions, consumers and businesses. Briggs’ market crisis response team aims to help its clients navigate the tangled landscape created by the market crisis.
“If past is prologue, the collective experience our attorneys gained during previous nationwide crises will allow us to provide clients with industry-leading legal services, strategic perspectives and tactical solutions,” says Frank Taylor, who is head of the firm’s Financial Markets Group.
Are you working in bankruptcy, restructuring or litigation? If you want to grow your career or your company’s bottom line, contact A.E. Feldman’s President, Mitch Feldman, now. Find out more about financial jobs and legal opportunities today!
