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Who says lawyers aren’t an excitable bunch? On Friday, March 29, the Department of the Treasury released a 22-page summary of a radical plan to revolutionize a wide swath of financial markets. Lawyers sprang into action. Many spent the weekend dissecting the summary and answering calls from panicked clients. Of course, the promise of sweet, sweet billables made the loss of Saturday and Sunday a little more palatable. The following Monday, Treasury Secretary Henry Paulson, Jr., held a press conference to announce the new plan, which covered everything from hedge funds to home mortgages. Lawyers felt an earthquake coming. Sweeping new regulations would mean one practice area would boom, another would die. There would be new laws to learn and new deals to make. But the waters never parted, the skies remained calm, and cats and dogs didn’t move in together. By Wednesday it was clear that realization of the plan would be piecemeal and slow. The Paulson plan began to disappear into the special dustbin for government studies on how to fix itself. Oh, but what a couple of days it was. “The opportunities for lawyers in something like the Treasury blueprint are in helping clients identify opportunities for competitive advantage,” says Cleary Gottlieb Steen & Hamilton partner John Murphy, Jr. There was speculation that some rules, like capital requirements for hedge funds and venture capital funds, could dampen dealmaking. “There may be less deals to do simply because there’s less money around,” says Fried, Frank, Harris, Shriver & Jacobson partner Thomas Vartanian. On the flip side, litigators could be busy. “Every time there’s more regulation, you have potential for more litigation,” Vartanian says. But then reality struck. “I think after the initial hullabaloo of the announcement, word started coming back from a number of sides that a lot of this is DOA,” says Davis Polk & Wardwell’s Joseph Hall, who helped author an alert that was rushed to clients 30 minutes after Paulson’s report was released. The sheer scope of the report, a lame duck president, and opposition on Capitol Hill made the reforms a long shot at best. That said, many lawyers think some change is warranted and that some of Paulson’s plans will be revived in the years to come. “I very much agree with the Treasury secretary that the current system, if it is not broken, is really showing its age,” says Sullivan & Cromwell chairman H. Rodgin Cohen. Shearman & Sterling partner Bradley Sabel, formerly with the Federal Reserve Bank in New York, says when he talks to foreigners about the U.S. financial regulatory regime, they can’t believe their ears. “Our system right now is a total hodgepodge,” he says. “It really makes no sense. But how to change it and rationalize it is a very daunting task.”

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