LAWFUEL – The Legal Newswire – Leading London-based international law firms are starting to feel a chill from the world market turmoil that may threaten the industry’s unprecedented profits boom, the Financial Times reports.
Corporate lawyers say the turbulence in the private equity sector is already feeding through to top legal advisers, clouding their otherwise strong starts to the financial year.
The British legal industry’s financial success is founded on the soaring international mergers and acquisitions market, although top firms argue that their expertise in areas such as financial restructuring will make them resilient in tougher economic conditions.
Chris Bown, co-head of the international private equity group at Freshfields Bruckhaus Deringer, one of the “Magic Circle” of leading law firms, said he expected the market problems of the past weeks to have a knock-on effect on the industry.
“We have had a very strong first quarter,” he said. “[But] we do expect September and October – which is probably about as far as the eye can see – to be quite a bit quieter.”
Mr Bown said law firms would be hit in the medium term by companies’ decisions to pull some takeover deals planned for this year. A number of big leveraged finance lenders, he said, had “for the time put a ‘gone fishing’ sign on the front door and suggested people come back later”.
The more difficult environment is a big test for the firms, many of which suffered badly in market turbulence after the turn of the millennium.
Since then, many of the largest firms have restructured, cutting partners and expanding internationally as part of a successful attempt to revive profitability