Time of trial for top law firms

By Julie MacIntosh 2009-01-12

Time of trial for top law firms

作者：英国《金融时报》朱莉•麦金托什(Julie MacIntosh)

Corporate lawyers enjoyed a rare moment in the sun last year, as the imploding financial markets turned their skills with legal contracts into Wall Street's weapon of choice.

Law firms were forced to get creative as banks scrambled to find novel ways to raise capital, dozens of parties sued each other over broken deals, and others wielded air-tight contracts as blunt instruments in order to get things done.

As dealmakers have focused recently on the intricate language of merger and credit agreements, corporate lawyers have stolen some of the spotlight usually reserved for investment bankers, buy-out investors and hedge fund managers.

“Lawyers probably become a little more significant in the context of adversity,” says Steven Davis, chairman of Dewey & LeBoeuf.

The profession's raised profile may prove fleeting, however, as the market distress that spurred last year's frenzied bank deals cools from a boil to a simmer.

“Bankers' ability to garner fees is going down,” says the head of another top global law firm. “But we definitely feed at the same trough.”

Several leading global firms expect their revenues this year to be flat or down compared to an already depressed 2008 and are preparing accordingly. Their responses offer insights into how professional services firms are tackling the downturn.

Top-tier firms are hoping that a flight to quality by clients, rather than penny-pinching downgrades to cheaper firms, will help prop up their businesses and prevent the need for job cuts until things improve. Skadden, Arps, Slate, Meagher & Flom, one of the world's largest law firms, has not cut back on recruiting and expects to have roughly the same number of summer recruits in its next class as in the prior summer.

To keep the pain to a minimum, law firms are instead concentrating staffing firepower in areas that are expected to be busy this year.

“We have more people than work at the moment, there's no doubt about that,” the global law firm chief says. “I think everybody on Wall Street is in that boat. We sort of try to redeploy, grin and bear it, and see how it plays out.”

Shifting lawyers between practice areas can put them on a steep learning curve, but many firms give staff a variety of assignments from early on in their careers to allow for such mobility.

M&A lawyers, for example, can maintain high-level client relationships by advising on asset divestitures or restructuring. “We're going to have a lot more crisis management, and that's what M&A lawyers do,” another high-ranking partner says. “Hopefully, you take the relationship you've had and expand it into more general corporate governance.”

The crash of the financial sector helped buoy some firms with large financial institutions practices last year, but few lawyers expect that sector to keep business afloat in 2009. Some top firms have seen their client roster shrink with the loss of key financial institutions.

Simpson Thacher & Bartlett shot to the top of Dealogic's 2008 global and US “announced M&A” rankings. But some of its biggest clients, for example, will not be around this year. Lehman Brothers, which has filed for bankruptcy, had been one of Simpson Thacher's top five or six clients annually. The firm also represented Wachovia and Washington Mutual before both banks were swallowed up by their brethren.

“There has been a huge consolidation in the investment banking industry and there are fewer players,” says the global law firm head, adding that the collapse of various banks last year was “painful” for his firm.

Dewey's Mr Davis says he is preparing for a flat 2009. Robert Sheehan, executive partner of Skadden, Arps, expects this year to be slower than 2008. “The likelihood is that there will be less business to go around for everybody, unfortunately,” he says. “Hopefully, things won't be as bad as some of the firms are cautioning.”

A silver lining will be bankruptcy and restructuring, where legal fees look poised to balloon this year. “That clearly will be the most vibrant piece of business, along with litigation in general that arises out of any sharp downturn in the financial markets,” says Mr Sheehan.

That will bode well for bankruptcy practices across the board, perhaps particularly for the large and well-respected operations at Kirkland & Ellis, Weil, Gotshal & Manges and Skadden, Arps.

Dewey's busy restructuring team is pulling in lawyers from the firm's other practice areas, such as tax, M&A, real estate and litigation. “The increase in restructuring has had a ripple effect on these other speciality areas, because it's not all what you would call pure bankruptcy,” Mr Davis says. “One area is sort of offsetting the other, so to speak.”

Mr Sheehan expected proportionately greater revenue from Skadden, Arps's restructuring department of more than 100 lawyers to help offset the drop-off elsewhere.

But restructuring revenues are expected merely to plug some of the holes created by a lack of M&A and capital markets business – not to provide enough work to keep law firms' staffing rosters busy.

Top firms also hope to pick up some of the slack through growth in litigation and arbitration, which tend to account for about one-third of their overall practices. “When markets go bad, people start suing each other,” Dewey's Mr Davis says. “That's clearly building.”

Firms are also placing bets that with the change in US administration, a need will grow for government “friction” work involving the Securities and Exchange Commission, white-collar crime, and regulatory, securities and tax law.

But while demand for experts in these areas looks strong, the slowdown is prompting questions about whether job losses, which have erupted at many mid-tier firms, will percolate into the top tier.

Dewey said last year that it would close four regional US offices after it underwent a merger and suffered from the seize-up of the structured finance markets. The firm has no plans for more office closures or job reductions, but Mr Davis acknowledges that a shift in market conditions could change that. Simpson Thacher has the financial ability to be oversized for a while, and is aiming to shrink through attrition and performance reviews rather than job cuts, says one person close to the firm.

“We'd like to get smaller and have business pick up – to find some sort of equilibrium.”

金融危机考验顶级律所

作者：英国《金融时报》朱莉•麦金托什(Julie MacIntosh)

公司律师去年罕见地风光了一阵，从内部崩塌的金融市场意味着，他们在法律合同方面的才能，成为华尔街的首选武器。

随着各银行竞相寻找新奇的方法融资，几十个当事人因协议无法履行而彼此起诉，另一些当事人则将无空子可钻的合同当作钝器，企图强迫履约，各律师事务所不得不变得有创造性。

随着交易撮合者近来在合并和信贷合同上咬文嚼字，公司律师从投资银行家、收购投资者和对冲基金经理等传统焦点人物那里抢走了不少风头。

杜威路博国际律师事务所(Dewey & LeBoeuf)董事长史蒂文•戴维斯(Steven Davis)表示：“面对困境，律师们或许变得更重要一些。”

然而，由于引发去年狂热银行交易的市场困境已有所缓和，律师行业的风光可能只是昙花一现。

另一家全球顶级律所的负责人表示：“银行家赚取报酬的能力每况愈下。但无疑我们的境遇也一样。”

数家领先的全球律所预计，它们今年的收入将与本来就不景气的2008年持平，抑或更低，为此它们正进行相应准备。它们的反应显示出专业服务公司正如何应对经济低迷。

那些一流律所希望，客户选择注重质量，而非吝啬地转向收费较低的律所，将有助于支撑自己的业务，并避免在情况好转前进行不得已的裁员。世达律师事务所(Skadden, Arps, Slate, Meagher & Flom)为全球最大的律所之一，尚未缩减招聘，并预计下一批夏季招聘人数与上一年大体相同。

为了尽量减少痛苦，律所正将人员编制的重点放在今年预期会繁忙的业务领域。

这家全球律所主管表示：“目前我们人员过剩，这一点毋庸置疑。我认为，华尔街无人能置身事外。我们在设法调整人员部署，坚持下去，看结果会怎样。”

在不同业务领域之间调动律师，有可能令他们面临艰巨的学习任务，但许多律所在员工职业生涯早期就派给他们各种各样的任务，使这种灵活性成为可能。

例如，并购律师可通过提供资产剥离或重组方面的建议，维系高级客户关系。另一位高级合伙人表示：“我们将提供更多的危机管理，这正是并购律师们的任务。希望是，你能从既有关系出发，将其扩大至更为广义的公司治理。”

去年，金融行业崩溃，帮助提振了一些拥有大型金融机构业务的律所，但很少有律师预期，金融行业能在2009年继续带来充足业务。随着主要金融机构的流失，一些顶级律所的客户名单已开始缩短。

盛信律师事务所(Simpson Thacher & Bartlett)跃居Dealogic 2008年全球及美国“宣布的并购交易”排名榜首。但其一些最大的客户今年将不复存在。例如，已申请破产的雷曼兄弟(Lehman Brothers)曾年年跻身盛信前五、六家客户之列。盛信还在瓦乔维亚(Wachovia)和华盛顿互惠银行(Washington Mutual)双双被同行吞并前，为它们提供法律代理服务。

“投资银行业进行了大规模整合，投行越来越少，”这家全球律所负责人说道，并补充称，去年多家银行的倒闭，让他的律所“处境艰难”。

杜威路博的戴维斯表示，他预计2009年市场会很低迷。世达合伙人罗伯特•希恩(Robert Sheehan)预计，今年将比2008年有所放缓。他表示：“很不幸，大家的业务量都可能会下降。但愿事情不会如一些律所目前警告的那样糟糕。”

破产和资产重组可能会带来一些希望，这些领域今年的律师费看来会激增。希恩表示：“这无疑会是最具活力的业务领域，还有金融市场急剧下挫会带来的一般诉讼业务。”

这对整个行业的破产业务都将是个吉兆，对凯易(Kirkland & Ellis)、威嘉(Weil, Gotshal & Manges)和世达等备受尊敬的大型律所来说，也许尤其如此。

杜威路博忙碌的资产重组团队正从该公司税务、并购、房地产和诉讼等其它业务部门抽调律师。戴维斯表示：“重组业务的增加，给其它这些专业领域带来了连锁效应，因为这不全是所谓的单纯破产。可以说，一项业务在一定程度上弥补了其它方面。”

希恩预期，世达100余名律师的重组部门能成比例地带来更多收入，以帮助弥补其它业务收入的下降。

但预计重组收入只能填补并购和资本市场业务匮乏所造成的一些缺口，而不会提供足够的工作量让律所全体人员保持忙碌。

各顶级律所还希望通过诉讼和仲裁业务的增长，填补一部分业务缺口。这部分业务可能会占到他们全部业务的三分之一。杜威路博的戴维斯表示：“当市场转差时，人们开始互相诉讼。这种局面无疑正在酝酿中。”

这些律所还确信，随着美国政府换届，对涉及美国证监会(SEC)、白领犯罪、以及监管、证券和税法的政府“磨合”业务的需求将增加。

不过，尽管对这些领域专家的需求看似强劲，但经济下滑使人们怀疑，许多中等律所业已爆发的裁员，是否会蔓延至顶级律所。

杜威路博去年表示，将关闭美国4家地区性办事处，之前，这家律所经历了一次合并，并因为结构化金融市场失灵而遭受损失。该公司无意进一步关闭办事处或裁员，但戴维斯承认，市场条件的改变可能会带来变化。一名知情人士表示，盛信的财力足以维持一段时间的人员超编，该律所希望通过人员正常耗损和绩效考核来缩减团队，而非裁员。

“我们希望降低规模，并振兴业务——以达到某种均衡。”

译者/陈云飞