Top law firms awash in business as crisis deepens

As the financial crisis worsens, top New York and London law firms are experiencing a boom in work advising banking clients in mergers and acquisitions, bankruptcies and lawsuits.
H. Rodgin Cohen, 64, chairman of New York’s Sullivan & Cromwell, is personally leading hundreds of attorneys from his firm representing seven financial firms, including JPMorgan Chase & Co, Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and the mortgage firm Fannie Mae. An attorney at another firm said he worked 450 hours last month, 15 a day.
The frenzy of deal business may be bittersweet, said Jonathan Lindsey, managing partner of the legal-recruiting firm Major, Lindsey & Africa.
“It’s good news and it’s bad news,” Lindsey said last week in an interview. “The good news is there’s a lot of deal work. The bad news is because the deals are so compressed in time the fees tend to be lower.
Deal volume, down 36 percent at midyear according to data compiled by Bloomberg, rebounded with the financial crisis and is now down just 27 percent for the year. The torrent of work may dry up as lawyers help clients go out of business or consolidate, Lindsey said: “Those deals will end.”
The firms handling major work stemming from the crisis besides Sullivan & Cromwell include Simpson Thacher & Bartlett; Davis Polk & Wardwell; and Wachtell, Lipton, Rosen & Katz.
Simpson Thacher is representing Lehman in issues arising from the company’s bankruptcy, the largest in U.S. history, which it filed Sept. 15 with debt of $613 billion.
Davis Polk client Fortis, the Brussels-based banking and insurance firm, has been bought by the Belgian government and France’s BNP Paribas.
“It’s a nice problem to have,” Andrew Johnman, head of the professional services team for U.S. banking business at Barclays Capital in New York, said of law firms’ wealth of work.
“All of a sudden you’ve got a load of business for M&A teams that were running short of 100 percent,’” he said. “When this boom is over, they’ll be running less than 100 percent again, but they might as well make hay while the sun shines.”
The spate of work began in March with the collapse of Bear Stearns Cos., the New York brokerage and investment bank, and its government-brokered sale to JPMorgan for about $2 billion.
Bear Stearns is being advised by the New York law firms Cadwalader, Wickersham & Taft and Skadden, Arps, Slate, Meagher & Flom. Sullivan & Cromwell advised Bear’s board of directors. Wachtell and London-based Linklaters counseled JPMorgan.
For some large law firms that haven’t picked up any work in the recent boom, the year has been a struggle. Firms including New York’s Cadwalader, Thelen and Thacher Proffitt & Wood have fired attorneys, and San Francisco-based Heller Ehrman, which once had 700 lawyers, collapsed last month from a lack of business.
The quick pace of deal work mostly favors top-tier Wall Street firms, Lindsey said.
“Corporate lawyers, except the ones that are working on matters directly related to the rescue plan, are in general much less busy,” the recruiting executive said. Securities offerings, securitizations and real estate lending, which often fuel firms’ corporate practices, are “dead,” he said.
“[This] has been a horrible year for the top firms,” law firm consultant Peter Zeughauser said. Recent deal activity could help firms recover slightly, he said.
In early September, Wachtell was called in to help the U.S. government take over Washington-based Fannie Mae and Freddie Mac, based in McLean, Va. Sullivan & Cromwell represented Fannie Mae and Cravath, Swaine & Moore its independent board of directors. Davis Polk took the lead for Freddie Mac.
“Firms with preeminent reputations are being chosen, given the groundbreaking nature of the deals being done,” said Dan DiPietro, who heads client relations for the Citi Private Bank law-firm lending group. &#8226