Ryan Rettmann left Thacher Proffitt & Wood in the nick of time. Last March, not long before the subprime crash paralyzed the debt markets, the first-year structured finance associate moved to Chicago's Kirkland & Ellis. At Thacher Proffitt, he had been working on securities backed by home mortgages, a niche that was dead in the water by the end of summer. At Kirkland, he took a job working on auto loan securitizations, a considerably healthier asset class.

Rettman wasn't prescient, just in love. He and his new wife had decided to leave New York and settle in Chicago, where he lined up the Kirkland interview after one phone call.

"I got lucky," he says. "At the time, structured finance was so hot that it was easy to get a job."

How quickly times have changed. With financial institutions battered by bad bets on subprime mortgages and the stock market staggering like a drunken sailor, law firms are bracing for disaster. In January a report from consulting firm Hildebrandt International Inc. and Citigroup Private Bank said that some firms had already experienced a "significant" drop in productivity in the third quarter of 2007. This year, the study concluded ominously, was shaping up to be the worst since 2001.

But a funny thing happened on the way to the recession: It seems that anxiety, like income, is not evenly apportioned within the legal profession. Since January, The American Lawyer has interviewed dozens of partners, associates, consultants and legal recruiters in threatened practice areas -- structured finance, real estate, M&A and private equity. No one we talked to denied that there are storm clouds on the horizon, but we found an interesting pattern in how much of a soaking they expect.

Among associates, anxiety is high, even though laid-off young lawyers are, so far, finding new jobs. Nevertheless, many associates echoed the sentiments of Kirkland's Rettmann, who says he scans The Wall Street Journal every day for news about market turmoil.

"I'm nervous," says one corporate associate at a New York firm that's already anticipating a downturn. This associate says he is reviewing contracts in anticipation of mortgage-backed securities-related litigation but doesn't know how long that work will last. "And my firm doesn't tell us anything," he says.

Partners, meanwhile, are blasé -- even focused on the lateral opportunities of a roiled market. And law firm managers? Dan DiPietro at Citigroup Private Bank says he's hearing "tremendous angst about 2008," with almost daily questions about "how difficult the year will be."

But most of the nine Am Law 100 firm leaders interviewed for this story insist that their firms are superbly positioned; they're worried about how the other guys will handle whatever the market throws at them. It's a strange phenomenon: The level of fear that lawyers expressed was in inverse proportion to their level of seniority.

Brian Brooks falls squarely in the "not worried" category. Brooks is the head of O'Melveny & Myers' Washington, D.C., office and a member of the firm's executive committee. In recent weeks, rumors that O'Melveny was culling associates through unusually harsh performance reviews bloomed on the Internet. Brooks says the stories are simply not true. "Unfortunately, the routine annual bonus process coincided with rumors that the economy is about to crater," he says. The number of associates who received low performance evaluations, he adds, was about 5 percent of the total -- the same as in 2007. Firmwide, Brooks says, O'Melveny is in good shape. The firm doesn't do quite as well in up cycles as its peer group, he notes, but has strong restructuring and litigation practices that thrive when the economy weakens. "Times like this give us an opportunity to shine," he says.

Ralph Baxter Jr. is also confident -- at least for his own firm, Orrick, Herrington & Sutcliffe. "We're not lawyers to the entire economy," says Baxter. "We're lawyers to our clients. The need for our services doesn't go away simply because the economy is less robust." (Ten percent of Orrick's revenue is from structured finance work, but Baxter says that includes all sorts of securitizations.) "The most important thing to say about 2008," says Baxter, "is that we don't know what's going to happen."

Even the severe downturn in deal work isn't daunting to some prominent practice leaders. "The private equity guys are very creative," says Alan Klein, a Simpson Thacher & Bartlett partner. "They have a lot of equity that they have to spend." Some of those dollars will likely go for "pipes" transactions, in which investors buy a piece of a company instead of the whole thing, he says. He also predicts more deals in Asia, the Middle East and Eastern Europe and a continued healthy clip for smaller buyouts. In the meantime, Simpson Thacher will be busy doing ancillary work related to the $156 billion worth of deals the firm helped broker last year. Still, Klein says, there's no question that people are worried. Dozens of signed deals have come apart in the last year, a collapse that Klein, a 30-year veteran, describes as "unfathomable."

But in a now-familiar refrain, private equity partners are saying that everything depends on positioning. At Kirkland, for instance, Frederick Tanne is blunt about the year to come. "In terms of the market, it's going to be a more difficult year for private equity," he says. "Anyone who says different is smoking something." Nevertheless, Tanne says that Kirkland, whose strength is in the smaller buyouts that are likely to account for most of the dealmaking in the next year, will be fine. The firm handled 85 private equity transactions in 2007 at an average of $1.2 billion each. (By way of comparison, Simpson Thacher handled 29 buyouts at an average of $5.4 billion each.)

Experienced partners like Klein and Tanne can take the long view. Associates are quicker to panic, especially when they believe they're being kept in the dark by their firms. But early indications suggest that those who have already been hit hardest by the downturn -- the 100 or so structured finance associates who were fired or bought out in recent months -- are finding other jobs. Thacher Proffitt and McKee Nelson, where 52 associates accepted buyout offers, say that all but one got new jobs, most right away. Cadwalader, Wickersham & Taft, which laid off 35 associates in January, says it expects most to find new positions at other firms, though it is too early to say for sure. Dozens more young lawyers, such as Timothy Hauck, a former first-year Thacher Proffitt associate, left their firms last fall and winter, before the buyouts were offered. Hauck landed on his feet and is now a corporate associate at Arnold & Porter. (He declined to comment.)

The lesson here: If there is pain in a downturn, there is also opportunity. Good performers, regardless of practice area, should be able to find other work, consultants say. "It's an opportunity for firms to pick up good people if they are willing to take the risk that they won't be busy for a while," says Bradford Hildebrandt. That goes for partners, too. Peter Zeughauser of the Zeughauser Group (a contributing editor to The American Lawyer) says that firms whose profits per partner were in the bottom third of the Am Law 200 are likely to lose talented young lawyers -- and have only themselves to blame. As the economy slows, dissatisfied partners are expected to change jobs in record numbers. This has legal recruiters licking their chops. "It could be the busiest year ever," says one.

A busy lateral marketplace is one of the few sure bets in the coming months. For everyone else, the watchword is uncertainty. Predicting future business cycles is a puzzle that economists, much less lawyers, are unable to solve. Just ask McKee Nelson, which last fall offered buyouts to 23 underworked associates. "I've been beating myself up over this for months now," says Reed Auerbach, head of the firm's New York office. "But then I realize there are smarter people that didn't see this coming."

Additional reporting by Nate Raymond.