A quick trawl through The Lawyer, Legal Week and online newspapers threw up some quite interesting information.
The Lawyer kicks off with “The collapse of Lehman, the acquisition of Merrill Lynch and the effective privatisation of AIG has left dozens of lawyers facing life without their once lucrative client relationships.”
This does not trouble some lawyers. In the same article from The Lawyer – “Back in Manhattan, Latham & Watkins had close ties with both Lehman and AIG. Is the firm troubled? Despite the double blow, at least one Latham partner seemed relaxed.“AIG and Lehman were both significant clients for us but individually we are not concerned about what has happened,” he said.“We had revenues of over $2bn last year and if Lehman represented $20m of that I would be very surprised.”
A quick snapshot from the news section of The Lawyer at lunch today reveals that top law firms and some barrister’s chambers are picking up fallout work from Lehman, AIG, Lloyds-HBOS et al.
Legal Week introduces a fairly obvious warning note: “City firms including Ashurst, Allen & Overy (A&O), Linklaters, Freshfields Bruckhaus Deringer and Lovells all sit on Lehman’s UK legal panel, with the bank estimated to spend some £40m in legal fees globally each year.”
PWC confirmed that the Lehman lawyers in London will be paid no later than 30th September – but will the market be able to absorb high rolling lawyers once the current work is complete? What of the legal teams and advisers, for example, in the Lloyds-HBOS takoever? Newspapers are suggesting that 40,000 jobs could go with the merger of Lloyds and HBOS – inevitably there will be a knock on effect in terms of lawyers and legal recruitment.
Further down the scale and in other sectors of legal work, what is the picture looking like there? The obvious downturn lies in property, commercial and residential. John Bolch over at Family Lore reports that divorce work is down, partly because there are fewer marriages but also, inevitably because people will be counting the practical costs of divorce in the current climate. Recession if it happens – and experts predict that Britain will go into recesiion – will bring an inevitable downturn in legal work across a range of sectors – although specialists in insolvency may well be the benefactors in the coming years.
The impact on legal education?
It won’t be long, I suspect, before law firms start deferring training contract starts and, it must follow, given the present economic climate, that recruitment will be even tighter both for young solicitors and for pupil barristers. The Law Schools will also have to do a fairly careful SWOT analysis of their expansion and recruitment strategies over the next few years. There was a time when investment in a new building could offset the costs of establishing a new course, should all go wrong – but with property values declining that option is no longer available to cover, running costs and recent expansion risk.
It will be interesting to see how the big law schools – The College of Law, BPP, Nottingham-Kaplan – cope with the changing financial landscape. Traditional universities offering LPC and BVC courses as part of a full service education provision without the same profit imperative may find their numbers dwindling as the big ‘corporate’ law schools eye up their students to feed the gaping jaw of expansion and, in the case of BPP and Kaplan, shareholder needs. If the schools start to cut back on costs, quality will suffer. Will we see a shakedown in LPC and BVC provision over the next two to three years?
It is too early to give a balanced analysis – there must be more to come, but the shape is beginning to form and it is not particularly benevolent or encouraging from the sidelines as analysts view it in the wake of “Black Monday”.