Law firms fear business will slow because of U.S. gov't shutdown

Reuters

By Casey Sullivan

NEW YORK, Oct 2 (Reuters) - Lawyers dependant on regulatorywork fear the government shutdown starting Tuesday could cause adrop-off in billable hours in the final quarter of 2013, legalexperts and lawyers said.

On Wednesday already some law firms had seen a slowdown inwork and had trouble reaching the Federal Trade Commission, theDepartment of Justice and the U.S. Government AccountabilityOffice, among other agencies.

"We're not going to be receiving subpoenas over the nextcouple weeks," said Angela Styles, co-chair of the governmentcontracts practice at Washington law firm Crowell & Moring, "andthere aren't going to be Inspector General investigations."

She said she has been telling some clients, "can't do muchright now."

The impact on law firms of the shutdown would depend on howlong it lasted, according to lawyers.

"The longer it goes, the more problematic it will be," saidGeorge Paul, an antitrust partner at law firm White & Case.

The types of law expected to be affected by the shutdowninclude mergers and acquisitions, antitrust, and governmentinvestigations and contracts, lawyers said.

Aside from Crowell & Moring and White & Case, other big lawfirms that regularly work with federal government agenciesinclude Akin Gump Strauss Hauer & Feld; King & Spalding; PattonBoggs; Covington & Burling; Skadden, Arps, Slate Meagher & Flom;and Kirkland & Ellis.

At the Securities and Exchange Commission, which hasremained open for business, work continues on investigations andapplications.

Paul said, however, there is expected to be a slowdown inregulatory negotiations with the Federal Trade Commission andDepartment of Justice over the review of pending mergers.

"It could hit some revenue in 2013, but I think it will berecovered in 2014," he said.

Paul didn't expect the government shutdown would kill anypending mergers his firm is working on, but noted that thegovernment's clearance of pending transactions could bepostponed so that deals don't close until 2014 instead of late2013.

That, he said, could delay lawyers' payout for legal fees.

IMPASSE

Other lawyers downplayed the business significance of adelay in civil litigation involving government lawyers.

"So much of the work goes on outside of the courtroom thatthe cases will be proceeding," said Richard Taffet, a litigatorwith Bingham McCutchen.

But that could change, he said, if there is a continuedimpasse in Congress and the courts eventually need to close.

Carter Phillips, chair of Sidley Austin, said the furloughsin the Justice Department have given private defense lawyers anadvantage in some litigation because government lawyers are nowincapable of working on cases.

Styles, at Crowell & Moring, said that in her own practiceshe has seen a slowing down in contracts disputes betweencontractors and the government because the venue through whichcompanies file objections to contracts, the U.S. GovernmentAccountability Office, is shut down.

Styles said that her firm has reacted to the slowdown byseeking to keep billable hours up by doing work in the firm'sother practices like ongoing government investigations. But eventhat work depends on the amount of government involvementrequired, she said.

Jeff Grossman, senior director of banking for Wells FargoPrivate Bank's Legal Specialty Group, said in a statement thatthe government shutdown "poses downside risk" to reaching thelevel of revenue growth Wells Fargo had projected law firmswould see in 2013.

Earlier this year, Wells Fargo and Citibank releasednumerous reports saying that law firms have had a particularlytough go in 2013 with lackluster demand.

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