Wall Street Law Firms Face an Uncertain Future

Until recently, things were a bit too quiet for Mel M. Immergut, chairman of Wall Street law firm Milbank, Tweed, Hadley & McCloy. The yearlong credit crunch had dampened dealmaking, while the litigation and restructuring work the firm typically counted on during down times hadn't kicked in. Then, on Sept. 17, Milbank learned it had beaten out at least two competitors to be selected as counsel to the unsecured creditors committee in the Lehman Brothers bankruptcy. In a flash, 30 lawyers were put onto the assignment—a number that's likely to double. "It's crazy busy now," Immergut says.

While the financial crisis may be hammering banks, it has spawned a flurry of activity for many of the nation's top-tier law firms, particularly those with a big presence in New York. Investor lawsuits, government investigations, employment law counseling, and bankruptcy work have thrown many firms into high gear. Yet there is also anxiety as lending dries up, corporate transactions go into a deep freeze, and clients vanish into insolvency or into the arms of other institutions. In a recent survey by recruiter Lateral Link, 42% of big-firm attorneys said the demise of Lehman and Merrill Lynch (MER) would hurt their careers, up from 27% who were similarly concerned following the collapse of Bear Stearns.