Law firms see opportunity in market tumult

By Martha Graybow and Paritosh Bansal

NEW YORK (Reuters) - Traders are grappling with falling stock prices, bankers are reeling from a slowdown in deals and corporate leaders are bracing for more fallout. But lawyers? They're still seeing plenty of opportunities.

The stock downturn and turmoil in the credit markets is expected to lead to reduced business for merger and acquisition lawyers at top U.S. law firms, but more cases are likely in areas such as bankruptcy and restructuring that had been in a lull during the buyout boom.

Litigation against lenders and banks stemming from the subprime mortgage market turmoil also is a growing area, as is providing advice to hedge funds that made wrong-way bets on risky home mortgages and may need to be liquidated and defended from investor lawsuits.

"Problems in the market generate opportunities for lawyers," said Joe Altonji, a vice president at legal consultant Hildebrandt International in Chicago. Law firms are "not 100 percent recession proof, but many of them are fairly recession resistant."

Bankruptcy has been a sleepy area at big law firms in recent years, though firms have been bulking up their bankruptcy groups in anticipation of a turn in the business cycle.

Restructuring once was shunned by upper-crust firms, which viewed it as second-rate work compared with negotiating deals or handling big litigation. But bankruptcy can be a major money maker, with lawyers reaping fees when companies file for bankruptcy protection or need advice on how to avoid it.

A top corporate law firm, Cravath Swaine & Moore, for instance, recently created a bankruptcy practice, and earlier this year hired a top restructuring lawyer from rival Skadden Arps Slate Meagher & Flom to run it.

Adrian Zuckerman, co-head of the national real estate practice of Epstein Becker & Green, said his firm was looking at possible acquisitions of bankruptcy and other practices that provide restructuring help. The firm has about 380 attorneys in 11 offices.