You'd think since all the MBS associates have no work, they'd weigh in...They're probably just booking flights to the bamahas, folding up the cots they've had in thier offices for the past 2 years, and digging through their Outlook contacts for the phone number of the girlfriend they forgot they had.

CWT is more diversified than TPW so I think they are less exposed in a sense, but I'll give anyone 1 million to 1 odds they would not take a partner paycut before axing associates. If profits fall more than $100 per partner, they'll be dismissing the FBUs faster than you can say RIGHTSIZE. A greedier pack of jackals can't be found.

Watch your bonis CWTers. The only top 20 (#3) PPP firm that has a billing requirement for its bonis, and there were a ton of CWT GAs that went hungy at the holidays the last time things slowed down.

for once I am glad to be in litigation! we were slow for a bit (not dead, just slow) but now things are good!!!

Anyone have insight on road ahead for McKee Nelson?

Since they've got the commercial mortgage backed securities covered, I've drafted a complaint for the next suit:

1. Plaintiff is a large hedge fund.

2. Plaintiff believed it had found an excellent opportunity to profit heavily in a particular security, specifically, sub-prime mortgage-backed securities.

3. Plaintiff, as a firm with experience in various securities, had no reason to think these securities, backed by risky mortgages, were risky, instead it reasonably expected fantastic returns without risk.

4. Plaintiff retained Defendant to draft the securitization agreements.

5. Defendant failed to advise Plaintiff hedge fund that the then-red-hot housing market might not stay red-hot forever.

6. Defendant law firm had a duty to inform Plaintiff hedge fund that markets could go down as well as up.

7. By failing to warn Plaintiff hedge fund that the incredible returns Plaintiff promised its investors may also entail risk, Defendant law firm breached its duty.

8. Plaintiff has been damaged in an amount to be determined at trial, but not less than the value of the several private jets and yachts that principals of Plaintiff had intended to buy after taking our 2 and 20.

9. Further, investors in Plaintiff has also been damaged.

10. As mere accredited investors, Plaintiff's clients reasonably expected that their millions would turn into many millions.

11. It is not Plaintiffs fault that it made risky investments in sub-prime mortgage-backed securities.

WHEREFORE, Plaintiff hedge fund demands judgment in the amount of several yachts and private jets, and for such other and further relief as to this Court seems just.

10:52 -- "bonis"? Really?

Clearly, Hooked on Phonics has worked for you.

ABS will slow down, it won't die. Banks refuse to keep certain assets on balance sheet anymore, so they'll need to sell them on. While its unlikely SIVs will be as huge as S&P said they would be (chortle), the notion that structured associates are "slow" right now isn't really the case.

If you're going to bring up CWT's bedbugs, you might as well add all the recent insults to the injury and remind everyone that CWT's services in the NWA bankruptcy were found to be completely ordinary and not warranting the $3.7M bonus they wanted for themselves.

Wait, wait, wait. You're telling me that all those brilliant, hard working, oh-so-deserving top tier law grads SCREWED UP? How is that possible?

11:05 - I think 10:52 must have meant "penis"

I was at an event the other night hosted by A & O and started talking (lamentably), with a McKee sr. associate who swore "this was [his] year [to make partner]." He got stinking drunk, showed his a** to everyone around him and then went on a rampage about how the partners at MN are all d*cks.

Methinks there's trouble afoot at McKee.

11:32, your post reflects some attitude.

Settle down now, kids,

On MBS: It's slow, but so is housing in general now, if you haven't noticed. Nobody trusts mortgage brokers or rating agencies right now (which is hitting RMBS and CMBS, respectively). The actual money lost due to subprime junk is minimal. Everyone's holding off on MBS right now because they can't get a good price.

On ABS: Nothing has gone wrong in ABS. Even Nomura is still doing student loan ABS deals in the US. It's just a rating agency trust/pricing issue.

But in the end, all of those huge businesses all over the world still have to borrow money. That's not going away. They can hold off for a quarter to get better prices but then there will just be a deluge later.

At my firm we just took some time off or did some pro bono. And now, predictably, we're getting buried again.

As for bonuses, PPP, layoffs, etc., recall that up through the end of June we were on a record pace, everyone was working weekends, and we were all on pace for 2700+ hrs. Six weeks off just puts us on track for a happier year. It doesn't put us under 2000.

And the new deals are more lawyer-intensive, since everyone is trying to renegotiate terms. We're getting paid more for the same deals, and the work is more interesting.

So don't wait for the sky to fall. Structured finance is only growing, and 2007 isn't going to be a bad year.

cravath ftw!

Daddy (12:09), can you please at least give a clue as to what SF practice has 2700+ in billables?

Also, I admire your positive outlook, but do you think the temporariness of the downswing applies to all of the major SF practices?

I think there is still some damage to be done to the market, not necessarily through subprime mortgage backed securities, but through the use of credit derivatives in general. Everybody is highly leveraged, which makes financial sense in a growth cycle with historically low interest rates, and justifies that leverage through credit derivatives.

While the subprime-related credit crunch didn't sweep through the other areas of the market, I think it is just a matter of time until another crunch comes around and everybody gets clusterf**ked.

i should probably accept my offer at sidley today. thank god i want to do litigation.

11:05 you green first year piece of garbage. Had you put any time into this profession, you would know the accepted plural of the word bonus, dating back to the original yahoo greedy boards is bonis. Pronounced bone-ees. Go review a document.

BigLaw firms in Charlotte are highly dependant on structured finance. In fact, most do strictly SF work and would, arguably, not be diversified enough to weather a major down-turn.

What's up in CTL?

12:19, I really just wanted someone to call me Daddy.

This year no one is going to get 2700 (we were only ON PACE to get it, and that pace sucks). And most firms don't want anyone to bill that high but they often cannot hire enough associates to keep up.

To dime out a place I don't work, CWT Charlotte associates can count on hitting 2400-2700/yr (at least in years past).

Of course I'm a little extra positive. I'm no banker, either. Securitization might go out of style a little, but companies will still have to borrow money. There will just be other structures, like covered bonds. If you're at a firm with a small structured finance practice that lives on scraps representing buyers in random CDO junk tranche purchases then you're probably screwed.

But if, like me and many others, your practice is big, with a bunch of clever partners, you'll be fine. We represent issuers, you see. Buyers come and go, banks can get into trouble, but issuers drive the whole process. And issuers use law firms to borrow money no matter how they borrow it- secured or unsecured, off or on balance sheet.

I think McKee's (and everyone's) CDO work will cool off but that money is out there. Investors need to invest and issuers need to borrow. The good firms will still be there making the deals happen, if they're called something else in two years.

To 12:23, the leverage definitely has to come down, and that might hurt volume. But bankers are the ones who work on commission. My firm gets paid the same whether an issuer sells $3billion or $1billion worth of notes. Flat fee for some, hourly for others, but it's not a cut of the closing price.

I hope this is making sense to you all- you don't need to bail out if you're at one of the big practices.

And now since my good deed for the day is done I am going to get back to reading about the Yankees.

That was balls on, 10:50. I even forgot her name.

Hey 12:36, have things recently (i.e. in the last month) improved for litigation bound associates?

Last word on the street was that (due the the surprisingly large share of summers choosing lit, coupled with the poor outlook for 3L clerk hiring) litigation people might not get their first choice as to groups (or may even spend some time in non-litigation, though not exactly transactional, groups)...

And why wait so long to accept your Sidley offer...is it just to drive this week's ATL spotlight readers (lower tier students) crazy?

12:42 - I'm sorry grandpa. I didn't realize that there was an internet version of Old English that us "green" associates were held responsible for. Now stop looking for your lost marbles on "the ATL" and go oil the wheels of your walker, they're squeaking.

CWT will be fine, partners and associates. Yawn. More exciting posts, please.

12:42, if you're going to form the plural of "bonus" by Latinizing it, it should be "boni." The "s" on the end is unnecessary. You may be older than us, but you're still a moron.

Why does everyone enjoy so much hating on the Cee Dub? Bed bugs give me a huge rigid bonis.

Why does everyone enjoy so much hating on the Cee Dub? Bed bugs give me a huge rigid bonis.

Credit markets have been tightening since Q1 and I think the worst of it has passed, particularly with the Fed action last week. Of course we shall see however I anticipate that the appetite for ABS will increase exponentially, as opposed to MBS which domestically may wane for year(s). Internationally, it will increase but the US market is where the dollars dance in the MBS world. ABS is simply experiencing a momentary hangover from the MBS investors. Once that hangover clears, ABS will rule the house, particularly student loans (provided these greedy attornies general i.e. cuomo don't try to get their greedy mits on the pot).

For what it's worth, Cadwalader has been making offers to 3L's for Capital Markets next year. If they were worried about layoffs, why would they still be giving 'non-traditional' offers on top of already giving offers to the entire summer class?

CWT beefed up their bankruptcy department recently and has had a quick rise to the top of PPP and Vault rankings in the last few years. They look well-positioned. Even if they did see a drop in profits, I don't think they would tarnish their otherwise spotty reputation with law students by even considering layoffs. Fear not, drones.

CWT will never need layoffs because their associates already leave due to the horrible work conditions there. Associate turnover is like 37% for the first 3 years.

11:42 -- I can't imagine this to be true. You must have the details wrong.

CWT says it is diversified and won't suffer from the SF meltdown. They're relying on bankruptcy and intellectual property to carry them through. Has anyone looked at the IP partner they recently hired from a boutique firm? He has no litigation business! Word is CWT is trying to get through the tough times by becoming a patent prosecution mill. Even the IP boutique firms are getting out of this unprofitable business. Somebody at CWT is missing a few synapses.

I don't necessarily approve of how cwt and a number of firms similarly positioned to cwt are keeping their new hiring of associates at a steady pace. Adjustments to their current associates positions are currently underway there as they are at many firms. high levels of new hiring will only make the necessary adjustments for people currently working there more difficult in the future.

This hiring choice must be a deliberate business decision to focus on market signaling. You can't signal weakness, lest the markets' smell the weakness and pounce upon it, thereby aggravating the condition. And if CWT reduces it's hiring before other firms then ( in classic game theory fashion) it will suffer relatively drastic reductions in its ability to recruit from the top tier schools.

Underlying business weakness is already apparent at firms that have specialized in capital markets work. Keeping record levels of new associate hiring at a steady clip won't fool anyone. Now is not the part of the business cycle where businesses should be worried about recruiting top 'new' talent. Cwt and others would be well advised to worry less about recruiting top talent than retaining it. This would also be better for moral. I think honesty is generally good for moral.

On the plus side, If cwt has proven anything by its track record and managerial talent, it's that it's better positioned to deal with change than other lawfirms. Allowing some associates to take severance packages, and perhaps retracting a few new hire offers is a decent way to save money in the short run. but in the long run, you must bring in business to make money, saving money alone won't do with an eroding client base. I trust cwt will once again figure out it's next strategy for courting legal work better than most other lawfirms.

Consider the example of its recent expansion of its bankruptcy department ahead of the pack of firms. Just about everyother lawfirm is immitating cwt when it now has become patently obvious that bankruptcy partners are now entering 7 years of plenty. Rest assured, CWT knows how to turn legal services into earnings. Meanwhile we can only hope all lawfirms deal as best as we can hope for with the upcoming transitional period. ....it's only business, it's not personal.