Dominating today’s news cycle is the Treasury Department’s plan to reform the nation’s system of financial regulation. For some thoughts on the proposal, check out what John Carney has to say over at our sibling site, Dealbreaker (in posts here and here).
This regulatory reform proposal comes at a grim time for Wall Street, characterized by some as “the worst financial crisis since the 1930s.” It feels like we’re at the end of an era. Wall Street profits are sinking fast, venerable investment banks look endangered, and financial-sector layoffs could claim 20,000 more jobs in the next two years, in New York City alone.
This is generally viewed as bad news for Biglaw, considering how much large law firms depend on the financial services industry for work. But could it perhaps be a boon for lawyers, if their standing in the city’s financial pecking order falls at a slower rate than that of Wall Street Masters of the Universe?
A reader drew our attention to this interesting Sunday Times article:
The collapse of a major financial institution is usually an occasion for hand-wringing and tut-tutting over potential job losses, lower consumer spending and missed mortgage payments.
In New York City, it’s also seen as an opportunity. For many of the city’s middle class, especially those in the creative class, who have felt sidelined as the city seemed to become a high-priced playground for Wall Street bankers, the implosion of the brokerage house Bear Stearns raises a tantalizing possibility: participation in an economy they have been largely shut out of.
Wonders our tipster:
“Some New Yorkers seem to be looking forward to the collapse of Wall Street and their huge salaries in the hopes that prices deflate a bit. Does this return lawyers to the top of the financial food chain? Or do those huge partner salaries take a dive along with Wall Street?”
For some law firms and lawyers — e.g., those that are heavily dependent on securitization and structured finance work — the Wall Street retrenchment is definitely unwelcome. But for others, especially those focused on countercyclical practice areas like bankruptcy, the bust could be a boom.
Take a look back at this post, in which one Biglaw partner described the plight of lawyers in New York as follows:
“Face it, [lawyers] have no status. We go to these [elite private] school functions [for our kids], and this well-heeled group looks right through you. They won’t give you the time of day. You’re just one step ahead of the doorman.”
So could there be, for lawyers, a silver lining to this economic cloud? Will lawyers move up a notch or two in the Gotham caste system thanks to the recession? Or are they too closely linked to Wall Street and its sinking fortunes to benefit significantly from any social and economic realignment?
Dumping Our Regulatory Alphabet Soup [Dealbreaker]
Treasury’s Brave New World Of Financial Innovation [Dealbreaker]
You Say Recession, I Say ‘Reservations!’ [New York Times]
Earlier: Pity the Poor Partners?