Lawyers, accountants and consultants are needed to help firms owed money by failing banks and to represent executives being blamed for the mess on Wall Street.
Similar to the cleanup crews descending on Texas in the aftermath of Hurricane Ike, financial cleanup crews are mobilizing around the wreckage of Lehman Brothers. Just minutes after Monday’s bankruptcy announcement, the cell phones of hundreds of lawyers, accountants and consultants started chirping.
“The BlackBerrys of bankruptcy attorneys have been going off for days,” said Denis Cronin, a partner at law firm Vinson & Elkins.
He represents a bank that was just elected to the seven-member Creditors’ Committee overseeing Lehman’s bankruptcy. The bank is one of Lehman’s largest unsecured creditors.
“There will be additional hiring by firms, you can be sure of it,” he added.
Vinson & Elkins has added five new bankruptcy associates to its 25-lawyer practice in as many months, and is looking to hire several more by year’s end.
In addition to bankruptcy, other areas that are beefing up include white-collar and securities-practice groups at law firms, as well as forensic accountants and legal/financial software companies.
Davis Polk & Wardwell, for example, has several departments that have kept the lights on for the past two consecutive weeks. The firm’s transactional lawyers are lead counsel to the U.S. Treasury Department of the Federal Reserve Bank of New York in the $85 billion AIG rescue, and various financial groups are advising Citi as one of the largest creditors to Lehman. The firm is also lead counsel to Freddie Mac, which was recently taken over by the Fed.
“I’ve barely left the office and I’m not even a lawyer,” said a firm spokesman.
Lawyers rarely travel alone—often they have accountants in tow.
“When there’s business change and big losses, people scramble to try and recover as much as they can,” says Sam Rosenfarb, managing director of M&K Rosenfarb, the forensic accounting division of accounting firm Marcum & Kliegman. “Most of litigation is about money, and whenever you're fighting about money, people need forensic accountants.”
Rosenfarb’s group has 90 forensic and investigative accountants—the folks who delve into laptop computers’ hard drives and BlackBerry messages to find out who knew what, when. Rosenfarb is hiring at a fast clip, with plans to add 60 more staffers by next summer.
Other related industries are also seeing growth. Online education firm Lawline.com reported this week that a record number of lawyers had signed up for the company’s bankruptcy courses, making it the busiest time in the past decade, president David Schnurman said.
“In the 10 years that we’ve been providing [these courses], I cannot recall another time when the events of the real world crossed over into [ours],” he said.
With so many financial institutions in compromised positions, now is the time when investors and regulators start looking to point fingers. Historically speaking, blame often gets cast on the leaders of those institutions, who will presumably be in need of legal representation.
“I feel like Derek Jeter standing at shortstop,” said Marc Mukasey, head of white-collar criminal defense at Bracewell & Giuliani, which is actively hiring attorneys to handle all of the inquiries coming its way. “You’re ready for the ball to come, and it will be either this batter or the next one.
“If you even think you might need a lawyer, you probably needed one two weeks ago,” Mukasey said.
Filed by Hillary Potkewitz of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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