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What, Me Worry? Not These Law Firm Leaders

By Debra Cassens Weiss

March 14, 2008, 11:09 am CDT

Associates appear to be more worried about the economy’s effects than the leaders of law firms interviewed by American Lawyer.

“It’s a strange phenomenon: The level of fear that lawyers expressed was in inverse proportion to their level of seniority,” the magazine says.

So far the evidence indicates the new lawyers are agonizing needlessly, according to the story. About 100 associates in structured finance have been laid off or bought out by law firms, and most are finding new jobs, the magazine says. Among the firms that cut associates were Thacher Proffitt & Wood; McKee Nelson; and Cadwalader, Wickersham & Taft.

Besides structured finance, other hard-hit practice areas include real estate, mergers and acquisitions, and private equity. But managers at the nation’s top 100 law firms that specialize in these areas say they are well-positioned to handle the downturn.

One of them is Ralph Baxter Jr., chairman of Orrick, Herrington & Sutcliffe, where about 10 percent of the firm’s work involves structured finance. “We’re not lawyers to the entire economy,” Baxter told the legal magazine. “We’re lawyers to our clients. The need for our services doesn’t go away simply because the economy is less robust.”

Private equity partners told the magazine that positioning is key to weathering the slowdown. Frederick Tanne of Kirkland & Ellis acknowledged the year will be more difficult for private equity. “Anyone who says different is smoking something,” he told the magazine. But he said Kirkland’s strength is in smaller buyouts that are likely to account for most of the deals in the next year, making the firm less likely to take a hit.

Meanwhile, problems in the economy could be a boon for lawyers looking to make lateral moves, according to law firm consultant Bradford Hildebrandt. “It’s an opportunity for firms to pick up good people if they are willing to take the risk that they won’t be busy for a while,” he said. Another recruiter concluded, “It could be the busiest year ever.”