AT NEW YORK law firm Gibbons P.C, there is an energy growing that hasn't been felt in some time. The hours are mounting, the collapse of yet another financial institution just brought more work through the door, and the firm's lawyers are revelling in an uncanny mix of uncertainty about the future and adrenalin over the events unfolding.

Outside the firm, the city nervously awaits as the drama of yet another climax in the credit crisis saga forms around them. The world's media looks on, international markets adjust their points and the corporate world ponders on the merits of capitalism and the limits of greed.

Organisations across the city are shedding their costs, battening down the hatches and taking cover. But in a law firm such as Gibbons, a pool of opportunity awaits and they, like law firms across the country, are adjusting their services and staff to take on the work.

"Things are certainly crazy here," says Kevin Evans, an Australian qualified lawyer at the Wall St firm. "We appear to be in the midst of the uncertainty - so no-one is really sure what the aftermath for law firms and lawyers is likely to be, and we are only seeing the tip of the iceberg."

Evans, in the firm's corporate and finance group, says they have been incredibly busy since the bailout of Bear Stearns by JPMorgan Chase, with the activity still increasing following the Lehman bankruptcy filing, and AIG's significant ratings downgrade.

Meanwhile the FBI has announced an investigation into possible fraud involving Lehman Brothers, Fredddie Mac and Fannie Mae. Such a move - no doubt supported by a frustrated American public, given they have effectively been asked to underwrite billions of dollars to bail out the mistakes of bad debt - could mean plenty of work for the local law firms specialising in white collar crime.

Of course not all lawyers can put a positive spin on the financial crisis that could define a decade. Transactional work, alongside real estate, family disputes and certain areas of litigation, are feeling the consequences and some law firms are shedding their lawyers in view of the changing economic situation. According to media reports, it's not uncommon to find law firms leasing their floor-space, cutting their travel, entertainment, and what they are now deeming as "unnecessary" non-fee-earning staff.

A drive through the unknown

Uncertainty is the flavour of the day, and there is plenty of it in the firms across America. "Everyone is really waiting in anticipation to see what happens with the economy," Darren Gardner, an Australian partner in the West Coast-based Seyfarth Shaw, told Lawyers Weekly. "The general sentiment is that there is a rough path ahead, but no-one is sure just how rough it might be."

Gardner puts it down to a capacity for litigation. "The real question will be how much litigation will occur as it is often what sees US lawyers through the tough times," he says.

As an employment lawyer though, Gardner feels comfortable with the knowledge that any kind of economic downturn usually means big business in employment as organisations look to restructure their operations.

"Similarly, the insolvency lawyers are gearing up for a busy stretch," he says. "On the flip-side, the corporate and real estate lawyers all, understandably, seem a little anxious about what lies ahead, at least in the short term."

One path that is certainly defined, though, is littered with opportunities that extend well beyond the realm of the troubled financial companies hitting the headlines. According to Evans: "Many non-financial companies whose investments or business operations are linked to those troubled companies, potentially face multiple levels of exposure (that is) often hidden."

And plenty of phone calls are coming into Gibbons from clients whose businesses have been impacted indirectly by the situation they see unfolding on television. "Many clients have been affected - for instance as a result of being a direct contracting party with, or as an investor in, one of the financial sector's troubled companies or by serving that sector of having clients that conduct business within that industry," he says. "Others have indirect exposure through derivative transactions linked to the struggling institutions."

Meeting the makers

Despite growing anxieties, one thing for certain in the American legal system is that bankruptcy lawyers look to continue to be the main beneficiaries of the credit crisis.

"As much as I hate to say it, bankruptcy lawyers will do very well during this downturn," says Jonathan Hayes, a law professor at the University of West Los Angeles. "In business bankruptcy, if there are any assets with equity, the lawyers are paid first."

Meanwhile in consumer bankruptcy, says Hayes, the cost of attorney fees have soared since the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. "While the total bankruptcy filings are still nowhere near pre-BAPCPA levels, they are rising, so creditor bankruptcy lawyers will also do well."

Changing the path on the long road ahead

In response to, and even in anticipation of, the crisis that has plagued the US for more than a year now, law firms have created new practice areas of group lawyers of varying expertise who can respond to credit crisis, and subprime-related matters.

Pepper Hamilton LLP has created what it is calling the Credit Crisis Response Team. The aim is to offer an interdisciplinary group to bring together the varying and necessary practice areas of government regulation, commercial and mortgage banking, debt finance, bankruptcy and securitisation - to name a few - to assist clients with the impact of the credit crisis.

They're not alone: Another firm, Fulbright & Jaworski, has created what they're calling the Subprime Credit Crisis Practice Group, putting lawyers from commercial litigation, white collar crime and investigations and bankruptcy under the one umbrella to handle the work.

At Cooper, White & Cooper their specialised practice is called the Subprime/Credit Crisis Group. According to group chair of the firm, William Norman, the growth in the number of engagements dealing with the secondary effects of the crisis that are being handled by the group - particularly on commercial real estate development projects - is significant.

Many of these practice group were formed years ago, as law firms absorbed the fact that, yes, there would be blood. Wise they were: As of 10 September this year, Navigant Consulting found that the number of subprime-related cases filed in Federal Courts in the second quarter of 2008 had topped the 559 savings-and-loan lawsuits of the 1990s. It's a figure that had previously been thought of as one of the biggest fallouts of our time.

Jeff Nielsen, who heads up the Navigant Consulting financial services disputes & investigations group, says there was little surprise in the result. "We are now more than a year into the credit crisis and the litigation continues to pile up.

"One lesson of the Savings & Loan crisis," says Nielsen, "is that while a bank can be seized and even reconstituted over a weekend, the resulting litigation can linger for years.'

As deep in work that Evans in New York is at the moment, things look likely to get all the more intense as the tip of the iceberg melts to reveal the extent of the problem below. It's difficult to predict just what lies beneath, but Evans is adamant that the energy of the firm is rising with the unknown.

It's an energy that despite the crisis, and the anxiety about just how events will unfold, is pushing the adrenalin of lawyers everywhere. "To quote one of my partners," says Evans, "I'm not surprised by anything anymore."

- Angela Priestley