Bear Stearns, Job Survey, Wall Street

Associate Life Survey: Life After Lehman Brothers?

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As the Fed steps in to save the financial world with a bridge to nowhere AIG, we pause to reflect on the results from Monday’s ATL / Lateral Link survey, which asked whether the woes of Lehman Brothers and Merrill Lynch would hurt your career.

We received 830 responses, and quite a few of them looked like this one:

It’s the end of the world.

Overall, 42% of practicing attorneys said the demise of Lehman Brothers and Merrill Lynch would hurt their careers, which is way up from the 27% who said the same about Bear Stearns back in March. Law students are even more concerned, with 50% of 3Ls, 68% of 2Ls, and 63% of 1Ls feeling fearful.

While a third of New Yorkers were afraid about the impact of Bear Stearns back in March, the more recent collapses have frightened 55% of the Big Apple’s Big Law respondents. In fact, fear has risen dramatically in every market:

Responses by market: Are you afraid that the recent collapse will hurt your career?


City/Region		 After Merrill Lynch    
& Lehman Brothers    		 After
Bear Stearns
Austin 20% yes –
Dallas 20% yes –
Miami 20% yes –
Boston 31% yes 16% yes
Houston 34% yes –
Washington, D.C.     37% yes 20% yes
Bay Area 38% yes 13% yes
Chicago 39% yes 8% yes
Los Angeles 41% yes 24% yes
Philadelphia 44% yes 17% yes
Atlanta 54% yes 25% yes
Charlotte 54% yes –
New York 55% yes 33% yes

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Additional discussion, including selected comments from survey respondents, after the jump.


Roughly 43% of practicing respondents and a majority of law students fear the overall impact of a weakening economy. Some expect that fewer deals will mean fewer lawyers:

While it may result in a short-term increase in litigation and bankruptcy work, in the long term, deals will be down. Also with fewer players (through consolidation, merging and bankruptcy) means fewer lawyers needed in general.

Others expect that weaker budgets will mean lower billables:

As the economy continues to tank, our clients grow increasingly less lenient with the number of hours and rates charged for various services. While in a strong market clients prize quality over expense, in these less fruitful times, clients are placing greater value on lower costs.

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Or, put simply:

Less work.

Even less work.

Less work = fewer billables and less training

Less demand for lawyers == lower bonuses.

As work dries up, firms have to lay people off.

Several respondents noted that their firms will be directly hit by the fall of Lehman Brothers or Merrill Lynch. A number commented that either Merrill “is a big client of the firm” or “is one of our best clients” or “Merrill is our biggest client. Was.” Others lamented that “so many of my clients were partnered with or borrowed from Lehman.” And one respondent sums it up on a personal note:

Three of my firms biggest clients have disappeared this year! We may still be able to get some work from contacts that stay on after the merger, but that’s most likely going to take some time. What the fuck do I do in the meanwhile?

As has so often been the case this year, structured finance associates are the most troubled, with 80% expecting the recent turmoil to hurt their careers. It just got even harder to be one of the Cadwalader 96:

This is just the beginning of a general decline in New York. A few firms will pick up business from the trainwreck that is Wall Street but overall this is a huge negative. And for me it’s worse, as I am one of the “Cadwalader 96”. It’s already tough finding a job. Now we have the entire in-house department of Lehman (no severance there to rely on), and eventually whatever redundancies BofA deems there are in Merrill. BAD BAD BAD.

But misery loves company, and securities. 79% of securities associates, and half of general corporate associates are also afraid of the impact on their careers. M&A and energy lawyers also worry about the impact of “tighter credit markets,” with about two thirds of each group expressing concern. 69% of real estate attorneys are also worried, and 56% of tax attorneys fear that slower deal flow will mean less tax work, even though others claim that “Tax never stops.”

And one antitrust lawyer laments that “Less market stability = fewer mergers = fewer anticompetitive mergers for us to defend.”

But the recent demise of financial titans has not killed hope across all practice groups. Roughly two thirds of trusts & estates attorneys remain optimistic about their careers, no doubt expecting that death will continue even if Lehman Brothers doesn’t.

And litigators (73%), patent lawyers (82%), and bankruptcy lawyers (93%) provided a thorough analysis of why they expect their careers to live on after Merrill Lynch:

Litigation

Patent Litigation

More bankruptcy lit.

Litigation!

Litigator baby

Patent litigator, baby.

Patent litigation, son.

I’m in litigation!!

And a couple went on to say even more:

I am in consumer financial services litigation, and when Wall Street devours itself in its own greed, consumers look for someone (else) to sue. They generally find my non-Wall Street clients, and thus the class action is born.

Churn equals business, and the collapse of three massive banks is massive churn. We’ll see bankruptcy litigation for years, 10-b-5 suits against the directors of each and every collapsed company, maybe even some fiduciary duty suits against BoA for buying diseased assets. Thanks to conflicts rules, that’s going to spin out litigation to tens of firms–the insurers, directors, investors, creditors, and others will all have different counsel. This is a litigator’s dream.

Others, however, give less uplifting explanations for why they don’t think this week’s events will affect them:

I’ve already been asked to leave.

And, overall, there’s a general fear that today’s bad will give way to tomorrow’s worse:

WaMu and AIG will be the touch off of the next Great Depression… the spigots, only dripping now will be shut up tighter than… well tight anyway.

One 3L, however, takes a much more optimistic view:

[I]n the long run, the amount of activity in the financial markets will continue to grow and continue to demand legal work. This will happen regardless of how many big banks are out there. The work will increase along with the market.

In the long run, he may be right.

Then again, he’s planning on becoming a litigator once he graduates.

—

Justin Bernold is a Director at Lateral Link, the sponsor of this Associate Life Survey.

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