It’s lawyers who stand to profit from crisis at Lehman and HBOS

Anyone who does nothing but residential conveyancing is having a lean time, although we can expect to see some downsizing and repossession work affecting even the most expensive homes.

Commercial property has also been pretty stagnant — though there must be some work to be had in selling off redundant Lloyds TSB-HBOS branches as potential wine bars.

But insolvency is clearly the area to work in. At the very beginning of last week, Tony Lomas and three other partners at PricewaterhouseCoopers were appointed as joint administrators of Lehman Brothers. A fifth PwC partner is dealing with the bank's real estate assets, which are said to be worth more than £7 billion.

They, in turn, have brought in Linklaters. According to The Lawyer magazine, the City law firm has assigned 20 partners to the Lehman administration, backed by a team of 60 associates.

Though this is one of the biggest legal teams working on an insolvency this decade, it is thought the number of lawyers on the Lehman administration could rise to 200.
Solicitors, of course, need barristers and Linklaters is understood to have instructed William Trower QC, who now heads the commercial chambers at 3-4 South Square specialising in banking, insolvency and restructuring. They'll be busy too.

There is a downside, of course. While it was still a going concern, Lehman Brothers had plenty of legal work to spread around the City. Some of that work will not have been paid for yet, leaving the lawyers to queue up alongside other creditors.

But Clifford Chance is advising its Canary Wharf near-neighbour Barclays Bank, which is planning to buy some of the US bank's less toxic assets. And another of the magic circle law firms, Allen & Overy, is acting for HBOS in what the lawyers coyly described as its "merger" with Lloyds TSB. Linklaters is understood to have advised Lloyds on the takeover.

Meanwhile, business people need advice and reassurance. "I was around at the last recession and I have never seen such fear in the eyes of some of my contacts and clients," says Louise Verrill, a bankruptcy and corporate restructuring partner at the London office of Brown Rudnick.

The solicitor fears that the worst is not yet over. "We have had had a very good run for quite some time and we are now falling hard and fast," she tells me.

Legal advice is important when the unexpected happens. For example, last Thursday evening the Financial Services Authority amended its Code of Market Conduct "to prohibit the active creation or increase of net short positions in publicly-quoted financial companies".

The FSA named 29 companies to which the ban applied and published a similar number of answers to what were expected to be frequently asked questions.

But if I were a short seller I would be looking for clear legal advice on whether I could safely short other companies. And some hedge funds already appear to have been advised that they can sue the FSA for introducing the ban — although I would be interested to see how they claim the authority has exceeded its powers.

Lord Falconer, the former Lord Chancellor, predicted last week that the financial crisis would lead to litigation on a scale that we had not seen before.

Speaking at a litigation conference held by Legal Week magazine, he said the collapse of Lehman Brothers would unlock a flood of cases as creditors looked for institutions, advisers or regulatory bodies that they could blame for their loss.

That may all be some months off. But given the choice between being a lawyer and an investment banker, I would rather be a tortoise than a hare.