Such a substantial provision is understandable since the collapse of the bank’s stock from $169 a share in January last year - and $30 on Friday (14 March) - represents destruction of shareholder value on an epic scale. The question now is whether this can revive the US’ ailing plaintiff Bar. As Legal Week went to press, at least three firms were intent on pursuing claims in anticipation of the kind of explosion in lucrative work that emerged after Enron’s collapse and another had already set up a website to attract claimants. Research from Stanford Law School and Cornerstone also suggests the credit turmoil that led to Bear Stearns’ fate is already having an impact, with 100 companies facing securities litigation in the second half of 2007, dramatically reversing a two-year slump. As echoed by attempts to put together shareholder claims related to Northern Rocks’ nationalisation (though with much more chance of success), it seems likely there will be an attempt to put a European element onto the litigation against Bear Stearns.
There is also plenty for transactional lawyers to get their teeth into, with Rodgin Cohen’s much-vaunted regulatory practice once again helping Sullivan & Cromwell to secure work related to the market turmoil and Wachtell Lipton Rosen & Katz securing a show-stopping mandate ahead of JP’s regular counsel. Lawyers will be watching to see the impact on Bear Stearns’ main advisers, three of which have already separately announced redundancies.
It seems likely an unlucky firm will face the kind of hangover that afflicted Latham & Watkins after the last major Wall Street collapse, when Drexel Burnham Lambert bit the dust in 1990. As can be seen on pages three, eight and 10, we will be keeping readers apprised of the threats and opportunities from the US turmoil, often teaming up with our American stable-mates. It is also striking looking at the stories dominating this week (Mills-McCartney, hedge fund collapses, third-party funding), the extent to which contentious work is setting the agenda. For now it appears the main opportunities for legal advisers will be when things go wrong.
