Six months ago, Bear Stearns went belly up and was bought at a fire-sale price by JP Morgan. JP Morgan got quite the deal, really — they picked up a $2 billion-dollar building and a company with cash on hand for a price less than the cash Bear Stearns actually had. Of course, they also got Bear Stearns' debt, which was pretty severe.
Now, fast forward to this past weekend. Two more icons of the banking industry waved the white flag. Lehman Brothers and Merrill Lynch, both independent firms, are no longer. Lehman declared bankruptcy after failing to find anyone willing to take the company on, while Merrill Lynch managed to convince Bank of America to buy them, thus staving off Merrill's own bankruptcy.
Lehman Brothers turned to Weil Gotshal & Manges to manage the firm's bankruptcy. Harvey Miller, the head of Weil's restructuring practice, is known as one of the best in the business and also is known as one of the “deans” of the bankruptcy bar. Sullivan & Cromwell also managed to get involved, apparently representing Lehman in trying to sell off what profitable practices remain for the bankrupt company.
That's the latest, and it's not bad news by any means (at least for the lawyers), but the longer-term outlook, on the other hand, is actually pretty grim for legal professionals. Forget any race for higher salaries in New York now. Weil Gotshal will have lots of work running Lehman's bankruptcy for several months, but with the disappearance of two big Wall Street firms, there will be less work to go around for probably just about everyone.
Expect some law firms to get larger as business gets consolidated, but other firms may take a big hit. Firms that depended on Merrill Lynch and Lehman, for example, can expect to lose a lot of business, and that will mean cutbacks. It also means we can expect lots of laterals flooding the job market from top firms, and summer classes will probably get even smaller.
Once again, spiff up those resumes — some attorneys will no doubt need to make use of theirs soon! And better get in fast to those recruiters if you want to stay ahead of the herd.
