Business of Law
Hit Hard by Economy, Some Law Firms Borrow Big Bucks
Posted Mar 16, 2010 5:30 PM CST
By Martha Neil
Reluctant to ask partners to contribute more money, a "very undercapitalized" legal sector increased bank borrowing significantly during the economic downturn of the past 18 months or so, a consultant tells the London Times.
A number of well-known firms based in the United Kingdom increased their borrowing by 40 percent during 2008-2009, according to statistics compiled by the Grant Thornton accounting firm. However, some major London-based law partnerships still don't have any debt at all, the newspaper notes.
Those with the most debt include mega-firms Clifford Chance, with a little under $150 million and DLA Piper, with some $134 million. Among those with zero debt are Allen & Overy and Linklaters.
“It certainly looks like a lot of firms are going to a bank to get funding rather than sitting partners down and saying: ‘Look, guys, we’ve got to put some more money in,’ ” says Peter Gamson. He heads the professional practices group at Grant Thornton.