Banking Law

I don't know about my readers, but when I see a headline like this one from a recent issue of the Houston Business Journal ("Law Firms Brace For Subprime Fallout"), I envision  a gaggle of shysters locked in an office, hard hats perched on heads to shield their big brain pans, grasping two-by-fours that brace the ceiling against an onslaught of subprime turkeys plummeting to their doom from a helicopter hovering above, like in that old episode of WKRP in Cincinnati ("Oh, the humanity!" "As God is my witness, I thought turkeys could fly."). But, no, that would be inaccurate. Instead, large law firms, in Houston at least, are merely licking their chops over what's for dinner: litigation, bankruptcy, and various other forms of plague and pestilence.

Fulbright & Jaworski LLP's six-month-old global subprime practice numbers 100 attorneys. Most firms are starting small with units of 10 to 20 litigators, corporate bankruptcy specialists and white-collar crime lawyers.

Andrews Kurth LLP has assigned 13 lawyers on an ad hoc basis to the firm's newly formed subprime and distressed assets group.

"It's something we've been talking about a while," says Tom Perich, Houston managing partner for Andrews Kurth. "Our thought was that we're big in all these areas that were impacted, it seems like we know all aspects of this thing, and we've got the lawyers and finance experts."

[...]

Perich says the group likely could grow to dozens considering all signs indicate there will be plenty of work to go around.

"The front-line action is going to be lawsuits," he says. "People are going to be suing each other, so you've got to have front-line litigators. They need the subject expertise behind them."

The article doesn't note it, but I'm convinced that he punctuated his remarks about these joyful prospects with just the littlest line of drool running down his chin. When so many carcasses are being broiled over an open flame, the smell can drive you wild. You know you're in nirvana when it smells like subprime spirit.

And when it comes to economic disasters involving banks and real estate loans, where better to find your hired guns than The Great Republic?

The transition into subprime practice was not difficult. Many Texas law firms saw significant work in similar areas during the bust years of the 1980s and savings and loan scandals of the 1990s.

"We had probably our greatest growth spurt in the '80s," Perich says, noting the firm grew by 50 percent.

"A lot of those guys are still here," he says.

Ah, the good old days! As for "a lot of those guys" still being here, what he didn't add was the sentiment "and maybe we can squeeze another 3000 billable hours out of them before they flame out."

The article lists the plethora of potential defendants, which offers ample opportunity for "bet-the-firm" litigation, the kind that can suck the life out of paralegals, associates and contract attorneys, leaving them dried husks to be tossed on the fire of the equity partner pyramid, to be replaced by a never-ending supply of young suckers up-and-comers. Investment banks, mortgage companies, title companies, home builders, and investors are all candidates who can look forward to spending quality time with litigation and bankruptcy counsel, after which they can end their existence as biodegradable suicide bombers in a theater of action of their choice, because that's all they'll be fit for.

One of my pet peeves about the entire sales pitch of a "subprime practice group" has been that this isn't anything special. It's the same old skill sets applied to the latest segment of our economy to falter. Craig Weinstock of Locke Lord Bissell & Liddell LLP gets it.

"Nobody was born a subprime lawyer," Weinstock says. "These are folks who have depth of experience representing in the securities fraud area, financial institutions, white-collar crime -- expertise that is now being turned to these current problems."

My favorite line is from Wayne Kitchens of Hughes Watters Askanase LLP.

"Our entire default servicing group and a large part of the litigation group deal with subprime issues, lenders and borrowers on a day-to-day basis and has for years," says Partner Wayne Kitchens.

Hughes Watters is continuously in a subprime mode.

Says Kitchens: "Subprime is already such an intrinsic part of our practice that we felt no need to start any new group or section."

How strange are these times when a firm is described a being "continuously in a subprime mode" and that's a compliment.

Welcome to the Roadkill Cafe, boys and girls. Our steaks are Grade A (sub)Prime. And there's plenty for everyone.