An interesting article in today’s New York Times — by Lynnley Browning, author of the earlier Biglaw perks piece — focuses on the subprime mortgage mess and current investigations into the adequacy of disclosures to investors.
Investigators are focused on Wall Street, but lawyers involved in the securitization process may also face scrutiny. Government investigation is the last thing these struggling law firms need, as they try to retool in the face of a grim outlook for structured finance and real estate work.
The article focuses on McKee Nelson:

McKee Nelson burst onto the scene in 1999 and quickly grabbed lucrative Wall Street work from long-established rivals. William F. Nelson, one of its co-founders, said the firm, which is known for its sophisticated tax work, did not employ any special legal maneuvers to outflank its competitors. “There’s no secret, magic elixir that we sprinkled,” Mr. Nelson said.

In any case, the mortgage turmoil is now hitting the highly regarded McKee Nelson hard. The firm recently pared its structured finance department to 80 lawyers from about 115 through buyouts, sabbaticals and transfers to other departments. More cuts are unlikely, a spokeswoman said.

So that’s good news. And the firm is trying to take lemons and make the proverbial lemonade:

[A]fter profiting from the mortgage boom, McKee Nelson is now positioning itself to profit from the bust by riding the coming wave of lawsuits. In January, the firm flew its partners and their spouses to Charleston, S.C., aboard four Delta commuter jets, to map out its strategy.

“We’re heavily committed to doing more litigation,” Mr. Nelson said. The firm hopes to represent investment banks, hedge funds and other financial companies, as well as their executives, in a variety of litigation, he said.

And maybe law firms, too, as lawsuits and investigations proliferate? See, e.g., Cadwalader, facing a $70 million lawsuit arising out of a securitization deal gone bad.
Small Law Firm’s Big Role in Bundling Mortgages [New York Times]