Commentary: The new world

Writing this column on Tuesday, even the most worldly-wise lawyers are struggling to assess this week's extraordinary events on Wall Street on their own businesses. And come Thursday, when this column is published, they will still be asking most of the same questions.

After all, seeing two of New York's leading investment houses cease to exist as independent entities would have been considered unthinkable until recently. Now Lehman's insolvency - the largest US corporate bankruptcy ever and the most significant bank failure since the international liberalisation of the securities industry in the 1980s - is a defining chapter in the story of global business.

Yet leaving aside the very considerable uncertainty over the position of AIG, assessing the impact of Lehman's failure on lawyers is hard. Investment banks are middle men and so do not simply expand and reduce work levels by dint of their existence. So the impact of Lehman on advisers in New York and London is not as simple as its workflow drying up - that flow of work will migrate elsewhere, once demand resumes. Insolvency advisers, among them Weil Gotshal & Manges and Linklaters in the UK, also have the boon of picking up what promises to be one of the most complex insolvencies ever (or possibly until next week if we're unlucky).

For firms closely linked to Lehman, these are worrying times, particularly for Cadwalader Wickersham & Taft, which is already reeling from the collapse of Bear Stearns. The news is also shocking for Lehman's in-house team, many of whom are now looking for work. Set against that, their career prospects look a damn sight better than the thousands of bankers and analysts that have lost their jobs in an oversupplied financial services market.

Nevertheless, this week's events will lead to a further migration of highly-qualified Western lawyers to emerging financial centres like Dubai as some look further afield. But law firms will also have to get used to fundamental shifts, including the fact that the focused investment banks that they have spent the last two decades cultivating are dying as a breed, to be replaced by monolithic global financial services groups. That will have major implications for how law firms manage their client relationships - some good, some bad but most favouring the global law firm model.

But the more pressing issue is the impact the credit squeeze will have on already shaky global business confidence as the crunch enters what is probably its last but also most dangerous phase. So far law firms have got off, despite the odd isolated difficulty, relatively unscathed. Who can say how long that luck will hold out?