By Lindsay Fortado
Sept. 18 (Bloomberg) — Lehman Brothers Holdings Inc.’s collapse and the sale of Merrill Lynch & Co. to Bank of America Corp. will hurt legal careers, more than half of the New York lawyers surveyed by a recruitment firm said.
The firm, Lateral Link, said more than 800 lawyers and law students responded to its survey posted on the Web site www.abovethelaw.com, a popular legal gossip blog for associates and law students. Of the 371 respondents based in New York , 55 percent said they believed the finance industry’s turmoil would harm their career.
Lehman, once the fourth-largest U.S. investment bank, filed the biggest bankruptcy in U.S. history Sept. 15 with $613 billion in debt. Merrill Lynch sold itself to Bank of America for about $50 billion the previous day. Both are major clients of the highest-grossing New York law firms.
“Some firms have a different percentage of their business emanating out of the banks, but none of the major law firms would look as they do were it not for the financial industry,” said Robert Sheehan, the executive partner at New York-based Skadden Arps Slate Meagher & Flom. “There’s turmoil there.”
Sixty-three percent of first-year law students in the U.S. and 68 percent of those in their second year said the financial collapses would hurt their career prospects, according to the survey.
Summer Jobs“Now is the time that law students are making the choice as to which firms they’re going to summer with,” said Elie Mystal, editor-in-chief of www.abovethelaw.com, referring to summer positions law students take that generally lead to full- time jobs. “They’re trying to figure out which firms are going to be strong two years down the line. Their level of concern is even higher than associates.”
In March, after the collapse of Bear Stearns Cos. and its last-minute sale to JPMorgan Chase & Co. for about $2 billion, 27 percent of lawyers and law students who responded on abovethelaw.com feared the effect on their jobs, according to Michael Allen, principal at Lateral Link. Now, that figure is 42 percent.
“The investment banks and the larger commercial banks are the largest clients to the New York firms,” Sheehan said. Skadden’s clients have included Lehman, Merrill and Bank of America, he said.
Some large New York corporate law firms are benefiting from the boom in legal work. Weil, Gotshal & Manges is representing Lehman in its bankruptcy, and it advised American International Group Inc. on its possible filing.
Going Crazy“Right now we’re going crazy,” said Mark Walker, chairman of New York’s Cleary Gottlieb Steen & Hamilton. He cited the firm’s work representing Barclays Plc in its possible acquisition of Lehman Brothers’ North American investment banking and capital markets businesses for $1.7 billion, and advising the Federal Reserve Bank of New York regarding lending to Lehman and AIG. The firm also counseled Morgan Stanley in the U.S. Treasury’s takeover of Fannie Mae and Freddie Mac.
“It’s too early to step back and try to get some perspective on what’s going on,” Walker said. “Things are going to change. It’s a different world we’re living in. Will we all be doing something different a year from now? Maybe. Will the nature of the financial industry change? Maybe. When the leveraged finance market disappeared, the private-equity firms started doing different things, but they’re still investing.”
Lawyers aren’t panicking, said Margie Grossberg, a partner and the co-chairwoman of the global associate practice group at Major, Lindsey & Africa, the largest legal recruiting firm.
“I’m advising people to just sit tight, see how things shake out,” Grossberg said.
The firm has received “a handful” of resumes from attorneys at Lehman, Grossberg said. “They’re just starting to come in. I would expect that it would pick up.”