BigLaw's Banker: I've Got a "Robust" List of Firms That May Fail

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Oct. 26 (Bloomberg Law) -- Dan DiPietro, chairman of The Law Firm Group at Citi Private Bank, says he has a "somewhat robust" watch list of law firms that may fail in the coming months.

"In this kind of economic environment, it's hard to imagine we wouldn't have some" additional firms shutting their doors, DiPietro says, but he doesn't expect to see a "huge spike" in the See more +

Oct. 26 (Bloomberg Law) -- Dan DiPietro, chairman of The Law Firm Group at Citi Private Bank, says he has a "somewhat robust" watch list of law firms that may fail in the coming months.

"In this kind of economic environment, it's hard to imagine we wouldn't have some" additional firms shutting their doors, DiPietro says, but he doesn't expect to see a "huge spike" in the number.

Global law firms are perhaps most at risk, facing high expenses and soft demand worldwide, with the U.S. fiscal cliff looming, Eurozone problems continuing and the slowdown in China developing, he tells Bloomberg Law's Lee Pacchia.

In transactional work, there are "a couple of firms who are very busy, but they're basically grabbing most of the market share of the few deals that are there," and even they are unwilling to say that deal work is really rebounding, he says.

Citi expects law firm profits to be flat in 2012, after low single-digit growth in 2011. For 2013, there are doubts transactional work will come back in the same way it was before 2008, he says. Some general counsels are now handling some pieces of deals in-house, limiting law firm profits.

Four years since the recession began, many big firms still have too many lawyers, and "that's driving really bad pricing decisions," DiPietro says.

As an example, he said an AmLaw 50 firm was recently doing fixed-fee litigation work for a client at $350,000 per matter. Another AmLaw 50 firm bid $75,000 for the same business.

The partner responsible for the work wanted to cut their fees to keep the business, but the head of litigation and the firm's managing partner vetoed that because they thought "if we send that message to the client, it's telling the client that we've been overcharging for the past 18 months."

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