Trouble Ahead for East Coast Law Firms; One Expert Expects Dissolutions
Experts interviewed by two different publications foresee troubles ahead for East Coast law firms.
Ward Bower of legal consulting firm Altman Weil predicts the worst for some law firms. “I would anticipate that we would see more dissolutions, and I think they will be East Coast firms,” he told the San Francisco Chronicle. He said he expects profits per partner at the big law firms to be down 9 percent this year. James Jones of legal consulting firm Hildebrandt International told the American Lawyer that for New York firms, he expects to see a drop in profits of 5 percent to 15 percent.
The American Lawyer story says large New York firms that handled Wall Street business are picking up extra business in the short-term, handling “crisis assignments” such as the sale of Bear Stearns and Merrill Lynch, the bankruptcy of Lehman Brothers, and the conversion of investment banks to bank holding companies. But some observers interviewed said they expect a change in the long term because some Wall Street law firms aren’t well-diversified.
One of them is Peter Kalis, the chairman of K&L Gates. “The metaphysical question is whether you can have bulge-bracket Wall Street firms without Wall Street,” Kalis told American Lawyer. “The capital markets, when they rebound, will no longer have the margins they once did. Like night follows day, they won’t be willing to pay premium rates.”
One New York firm already buffeted by the downturn is Simpson Thacher & Bartlett. The story says 80 percent of its lawyers are in New York, and many did work for financial institutions, including the bankrupt Lehman Brothers. While firm chairman Richard Beattie acknowledges “a rough period of time ahead,” he thinks markets will turn around in a year or two and fees won’t be affected.
Francis Milone, the chairman of Morgan, Lewis & Bockius, was similarly bullish about the prospects for Wall Street law firms. “The top New York firms will continue to be successful,” he told American Lawyer. “They are not where they are by accident. People are kidding themselves if they think they will fall on hard times.”
