Legal News

When Wall Street Goes, Where Goes the Legal Work?

By Dan Slater

If yesterday’s headlines worried you, today’s aren’t likely to calm your nerves. WSJ: AIG, Lehman Shock Hits World Markets; AIG Faces Cash Crisis as Stock Dives 61%. NYT: Wall Street in Worst Loss since ‘01 Despite Reassurances by Bush.

It’s still too early to tell how the demise of Lehman Bros. and Merrill Lynch will reshape Wall Street, but one thing’s for sure: the law firms that serviced these banks will have to scramble in order to keep the work. In the NYLJ, Tony Lin takes a stab at what the new landscape is likely to herald for lawyers.

“There’s not a firm in the city that’s not terrified about what’s going on right now,” said the managing partner of one top New York firm. “It’s a question of whether you’re fortuitous enough to be representing a financial institution that survives or whether you represent one that’s not going to be around much longer.” He added: “You don’t know who’s going to emerge at this point. You don’t know what it’s going to look like tomorrow.”

At the outset, Weil Gotshal, the bankruptcy counsel for Lehman’s Chapter 11 filing, seems to be the obvious winner, if only in the short-term. As Lin notes, Lehman’s filing involves some $600 billion in debt, and will keep Weil’s bankruptcy department in the money for years to come. (For more on Weil and the Lehman bankruptcy, click here for a WSJ article on Weil’s bankruptcy guru Harvey Miller.) One source told Lin that yesterday Weil also conferred with AIG. Indeed, today’s WSJ reports that if AIG doesn’t secure fresh funding by Wednesday, it may have no option but to opt for a bankruptcy filing.

But how about the M&A work that Lehman provided? Simpson Thacher, as Lin notes, has been the bank’s go-to firm for underwriting and M&A advisory work. Perhaps Simpson can keep the work if Lehman deal teams go to other banks with which Simpson has relationships (but how many are left?) Back in March, as we covered the fire sale of Bear Stearns to J.P. Morgan, we spoke to Cadwalader’s Dennis Block about this very issue. He told us, “If you do good work for corporations and develop good relationships, those people when they land someplace else will look to you to help them.”

On the Merrill/BofA deal, Shearman & Sterling is handling the transaction for Merrill. And Merrill’s GC, Rosemary Berkery, as Lin notes, began life at Shearman. (Skadden has also traditionally seen quite a bit of Merrill’s M&A work.) But for M&A advice, BofA has long turned to Wachtell.

Full post as published by Law Blog - WSJ.com on September 16, 2008 (boomark / email).