||Another Wall Street casualty is creating lots of legal work.|
Meanwhile, Lehman Brothers is feeling slightly better now that Barclays, a British bank, has agreed to purchase most of the firm for $1.75 billion. Lehman's employees, however, might be forced to give back any bonuses from last year, as those payments may be scrutinized under the bankruptcy regime Lehman is now under. Clearly Gottlieb advised Barclays on its deal to snag Lehman, which should generate a lot of work for the firm.
Davis Polk & Wardwell, meanwhile, advised the Treasury on their bailout of AIG, while Sullivan & Cromwell represented the troubled insurance giant in the matter.
There may well be some silver linings in the meltdown after all, even as it appears that the carnage may not be over. Washington Mutual, and possibly Morgan Stanley, may yet follow Merrill Lynch and Lehman Brothers in waving the white flag. So, more legal work and mega-deals are likely to follow.
In addition, there are growing expectations for a massive litigation resurgence. The former Lord Chancellor, Lord Falconer, has predicted a litigation boom in the wake of Lehman's bankruptcy. At a conference in London, Falconer said that ''[t]here is going to be litigation on a scale that we have not seen before.'' He went on to predict the emergence of ''a new era'' for litigation and dispute resolution.
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With AIG, however, existing class action lawsuits are likely to take a huge hit, as the collapse of the firm's value means that any potential returns are likely to be greatly reduced.
After the panic is over (soon, we hope), it will be interesting to see the legal ramifications as some firms get fatter and others shrink. Early money has Cadwalader taking another hit.