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Recession Hits Law Firms

By Harry Kimball, Newser Staff

Posted Jan 26, 2009 2:18 PM CST

(Newser) – Law firms, once thought to be better able than most to weather sour economies, are finding themselves in a tough spot these days, the Wall Street Journal reports. While bankruptcy practices are holding steady, business in litigation has fallen off steeply as corporate clients settle instead of writing checks to firms. Across the industry, profits were down 8% to 12% last year, and firms are letting lawyers go left and right.

Midsized concerns are the hardest hit: When business slows, top talent can jump ship to larger, more stable competitors, often dooming their former firms. “Law firms are not the kind of companies that do well in adversity,” one lawyer said. “When bad things happen, people get nervous and they start to look around.” The loss of star lawyers can sink merger deals, compounding problems and quickly dissolving even venerable, long-lived firms.

[Images (2)]

[Quotes (1)]

The characters on "Boston Legal" aren't the only lawyers to see their firms disappear this year. Across the country, old and new firms alike are being hit hard by the recession. (Getty Images)

Real-life law firms aren't doing nearly as well as shows about lawyers, like the FX Glenn Close vehicle "Damages." (AP Photo)

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The best and brightest lawyers immediately say, 'I don't want to take a risk,' and they jump quickly to a less risky platform. Within weeks a firm can go from having financial difficulty to having a run on the bank. - William Brennan, law-firm consultant

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