5747 Forum

[shotsfired12]

redacted.

[Helmholtz]

I know this post is just going to prompt more speculation than anything, but I'd love to hear your intelligent opinions regarding the effect of wall street's demise on big transactional law. I mean, obviously a double dip or the potential EU blow up will not be good for hiring in the next few years, but what about these new banking regulations? Any thoughts on the relationship between Dodd-Frank and Volcker Rule, and big transactional business?

Dodd-Frank bad for biglaw?

http://www.nytimes.com/2011/09/09/busin ... wanted=all

Also, wtf is all this about Wall Street's demise?

[mrloblaw]

I'm pretty sure everybody is going to be more or less equally screwed once double-dip comes along.

Except, you know, those who already have experience in the thriving roving-band-of-vagrant-scavengers market; it'll be their time to shine.

[omninode]

What's this about the death of Wall Street?

There may be a few more lean years ahead, but Wall Street is not going anywhere. They created mountains of artificial wealth out of worthless assets in the 00's and, god willing, they're going to do it again.

[duckfan00]

Omni-
Do you have to be so honest???...

[BeenDidThat]

I know this post is just going to prompt more speculation than anything, but I'd love to hear your intelligent opinions regarding the effect of wall street's demise on big transactional law. I mean, obviously a double dip or the potential EU blow up will not be good for hiring in the next few years, but what about these new banking regulations? Any thoughts on the relationship between Dodd-Frank and Volcker Rule, and big transactional business?

The bolded aside (as it has been handled pretty well by previous posters), increased regulation will most likely help, not hurt, those lucky enough to make it into big law firms. Lawyers are needed for advice on the reach and scope of regulations, how to comply, how to structure deals, and for the handling the inevitable regulatory actions that will result under new laws. It's unclear how the changing regulatory environment will affect smaller firms, but for those in the ranks of big law, it should only help. And the increase in demand for legal services may well swell the ranks of big law.

[Julio_El_Chavo]

LOL @ Wall Street being "dead." There are a healthy number of deals being done right now and the corporate lateral market is picking up. Do you really think rich Wall Street guys are ever going to let the financial system collapse? There's no way. They have too much power and influence in Washington. The country will see double digit inflation before Wall Street goes under. Bailouts are the new normal.

[MrPapagiorgio]

Bailouts are the new normal.

[Renzo]

I know this post is just going to prompt more speculation than anything, but I'd love to hear your intelligent opinions regarding the effect of wall street's demise on big transactional law. I mean, obviously a double dip or the potential EU blow up will not be good for hiring in the next few years, but what about these new banking regulations? Any thoughts on the relationship between Dodd-Frank and Volcker Rule, and big transactional business?

Nothing here will be bad for biglaw specifically, and some of it is good. If the European banks fail, however, it's going to be mind-blowingly, horror-movie bad for everyone everywhere, lawyers included.

[Old Gregg]

If the European banks fail, however, it's going to be mind-blowingly, horror-movie bad for everyone everywhere, lawyers included.

Depends on the law firm and their exposure to euro banks, either in terms of their clients being those banks or their clients being banks who are exposed to those banks. In terms of the latter, local banks are fairly well hedged in the event of a PIIGS default. In terms of the former, not that many American law firms get so much work from euro banks (the only one that comes immediately to mind is Davis Polk and Santander, but that is hardly the bread and butter of their practice). Litigation-focused firms especially won't feel the hit. They're already overloaded with work to do, and litigation won't just stop if euro banks collapse. To be sure, local companies here in the States have amassed massive financial warchests with which to pursue their objectives, either in the form of a merger or in the form of litigation. Just because companies aren't hiring and putting out more jobs in the economy, doesn't mean they can't afford to do so. They have the money, but are using it for other things. These things are giving lawyers business, and the resources with which to do them are unlikely to evaporate overnight.

There's a lot of talk here about "double-dip," but that's sort of a flawed way of looking at the picture. The reality is that we were never out of a recession in the first place (as much as the Fed would like to insist otherwise). We're really almost scraping at the bottom of the barrel, and have been doing so for a while; and I say "almost" because the real bottom of the barrel was mid-2009, when the credit and capital markets basically froze. That really isn't the case here since American banks aren't so highly leveraged on a Euro default, have increased capital to reduce risk, and if they are leveraged, they've surely hedged their positions with insurers who follow new collateral regulations. Yes, there will be a significant reduction in capital if the Euro banks collapse, but M&A originating in the US seeks financing from a handful of banks. None of them are European.

In other words, if you're at a firm with strong a litigation, intellectual property, or restructuring practice (and you're in one of those groups), you're pretty safe. If you're in the corporate group of a large law firm, being at a Vault 10 or so probably provides decent security, though it's not as safe as being in the above groups. If you're at Katten Muchin corporate in Chicago, however, I'd be shaking in my boots if I were you.

[Renzo]

If the European banks fail, however, it's going to be mind-blowingly, horror-movie bad for everyone everywhere, lawyers included.

Depends on the law firm and their exposure to euro banks, either in terms of their clients being those banks or their clients being banks who are exposed to those banks. In terms of the latter, local banks are fairly well hedged in the event of a PIIGS default. In terms of the former, not that many American law firms get so much work from euro banks (the only one that comes immediately to mind is Davis Polk and Santander, but that is hardly the bread and butter of their practice). Litigation-focused firms especially won't feel the hit. They're already overloaded with work to do, and litigation won't just stop if euro banks collapse. To be sure, local companies here in the States have amassed massive financial warchests with which to pursue their objectives, either in the form of a merger or in the form of litigation. Just because companies aren't hiring and putting out more jobs in the economy, doesn't mean they can't afford to do so. They have the money, but are using it for other things. These things are giving lawyers business, and the resources with which to do them are unlikely to evaporate overnight.

There's a lot of talk here about "double-dip," but that's sort of a flawed way of looking at the picture. The reality is that we were never out of a recession in the first place (as much as the Fed would like to insist otherwise). We're really almost scraping at the bottom of the barrel, and have been doing so for a while; and I say "almost" because the real bottom of the barrel was mid-2009, when the credit and capital markets basically froze. That really isn't the case here since American banks aren't so highly leveraged on a Euro default, have increased capital to reduce risk, and if they are leveraged, they've surely hedged their positions with insurers who follow new collateral regulations. Yes, there will be a significant reduction in capital if the Euro banks collapse, but M&A originating in the US seeks financing from a handful of banks. None of them are European.

In other words, if you're at a firm with strong a litigation, intellectual property, or restructuring practice (and you're in one of those groups), you're pretty safe. If you're in the corporate group of a large law firm, being at a Vault 10 or so probably provides decent security, though it's not as safe as being in the above groups. If you're at Katten Muchin corporate in Chicago, however, I'd be shaking in my boots if I were you.

No, I stand by mind-blowing, horror movie bad.

If there is a sovereign default in the Eurozone, there might not be a bank left standing on the continent (ok, that's a slight exaggeration, but it will be dire). It would make the American credit crisis look like a joke. And, just as it did in the US, this will trickle down to the real economy when firms and individuals realize capital losses and lose access to credit. Recession and credit freeze across Europe will spread to the US, even if our banks are adequately hedged. And if we double dip (which is proper terminology, even if we are just talking about a downward trend away from recovery). We'll be standing in breadlines and selling pencils on the street corner, just like those old-timey photos of the great depression. Greece and Portugal will look more like Mad Max.

[Bronte]

What is this, 2008?

[Anonymous User]

What is this, 2008?

If the Euro fails it will be 1930.

[Bronte]

What is this, 2008?

If the Euro fails it will be 1930.

Lol. Take it to the recession panic megathread. If you go back a few years, you can read us all mocking the "wall street and big law are dead" alarmists.

[Renzo]

What is this, 2008?

If the Euro fails it will be 1930.

Or maybe 900 A.D.

[IrwinM.Fletcher]

What is this, 2008?

If the Euro fails it will be 1930.

Lol. Take it to the recession panic megathread. If you go back a few years, you can read us all mocking the "wall street and big law are dead" alarmists.

He's right though. We all have to hope and pray it doesn't happen, but this week has a very non-negligible chance of being a repeat of Lehman Brothers weekend in September 2008 (only worse). I'm slated for transactional this summer so I'm leading the cheerleading squad for the plunge protection team on wall street.

Normally I'd agree that this stuff belongs in a megapanic thread, but for now, it's current events and it seems fair to discuss it.

[Renzo]

What is this, 2008?

If the Euro fails it will be 1930.

Lol. Take it to the recession panic megathread. If you go back a few years, you can read us all mocking the "wall street and big law are dead" alarmists.

I'm not saying that Wall Street or Biglaw are dead. I'm saying the economy as we know it will be dead, and Wall Street and Biglaw will suffer secondarily because of it.

As that scare-mongering, anti-bank tabloid called "The Economist" puts it: