Paul Roberts was one of the legal profession's first casualties of the credit market slump. Laid off from Clifford Chance in November with the rest of a six-lawyer structured finance group, he figured the darkening economic clouds would mean a prolonged period of unemployment.
"I was planning on being unemployed until April at least," said Roberts.
But instead, by February, he had a new job with a promotion and a raise. A senior associate at Clifford Chance, Roberts joined the New York office of Alston & Bird as a counsel in the Atlanta-based firm's financial services practice.
Structured finance, which includes work related to the full spectrum of mortgage-backed securities, is the acknowledged ground zero of the current credit crisis, and firms heavily focused on the area -- like Thacher Proffitt & Wood, McKee Nelson and Cadwalader, Wickersham & Taft -- have already laid off or encouraged the departures of scores of lawyers.
But while some firms are bleeding, others are building, and at least some of the lawyers affected by the downturn have bounced back with surprising speed.
Cadwalader special counsel Laura Swihart, who had hoped to make partner this year in that firm's structured finance practice, became a partner instead at the New York office of Chicago's Winston & Strawn, bringing three Cadwalader associates with her. Likewise, McKee Nelson counsels Eric Adams and Hays Ellisen joined Chicago-based Katten Muchin Rosenman as securitization partners in New York at the beginning of March.
"They're seizing the opportunity to get people they couldn't normally get," said legal recruiter Alisa Levin of search firm Greene-Levin-Snyder.
She noted that during the past few years, when bankruptcy filings were slow, some firms seized the chance to recruit experienced partners in that area. Likewise, earlier in the decade, some firms saw the mergers and acquisitions downturn as a chance to hire laterals.
In some cases, the firms are sticking to plans they made before the downturn began.
Mark McElreath, co-head of Alston & Bird's financial service's practice, said the firm decided to expand its structured finance capability a few years ago and has been looking at candidates as it found them.
One major reason firms continue to hire in the area, said McElreath, is that, even with all of its current problems, structured finance remains one of the few transactional practices where non-New York firms like Alston & Bird can compete for business.
"We're not going to go head-to-head against Simpson [Thacher & Bartlett] or Cleary [Gottlieb Steen & Hamilton] on big M&A," McElreath said. "We have to focus on more niche markets."
He said private equity and hedge funds were other areas the firm was targeting.
Firms looking to expand in structured finance have hedged their bets to an extent. The lawyers they are now bringing aboard are mostly at the level of senior associates and counsels, so they are experienced without being extremely expensive for the hiring firms.
They are also versatile. Swihart said a lot of her work at Winston at the moment was more traditional real estate finance, such as syndicated lending, rather than securitization.
"Everyone right now is doing slightly different work than they were doing a year ago," she said.
Being laid off for economic reasons did not appear to hamper his job search, but Roberts said he did feel stymied by perceptions that his group at Clifford Chance had a very limited practice. Though that group worked exclusively with securities rating agency Standard & Poor's, he noted they worked on a wide variety of structured finance transactions, of which mortgage-backed securities only accounted for a fraction.
He said he was stung by press reports at the time of the layoffs that only talked about the group's mortgage-bond work or compared them, all senior associates, to contract attorneys performing rote tasks.
Like Swihart, Roberts said he is now focused on different types of matters. The work has "switched gears toward looking at all these provisions hidden in the documents that nobody really talked about before," he said. Many of these provisions are now at issue in financial workouts and are likely to be the focus of litigation down the road, he said.
At some point, said Swihart, securitizations will pick up pace again.
"It's still a vehicle people are going to want to use," she said. But Winston knew when she came aboard, it would be a "rough year to two years," she said.
Adams of Katten Muchin said his new firm is also willing to give the practice time.
"This isn't a short-term play," he said. "It's not like they haven't been reading the papers."