Law Firms Working on Collapsed M&A Deals May Never Get Paid

Law firms working on mergers and acquisitions typically get paid when and if a deal closes. That’s bad news for law firms working on deals that got delayed or fell apart in the economic downturn.

Mel Immergut, the chairman of Milbank, Tweed, Hadley & McCloy, told the American Lawyer that some law firms will have to write off much of their deal work. The situation is particularly bad for firms working on stalled or collapsed mergers, private equity deals and corporate financings, the publication says.

"There are a large number of deals in some areas, such as capital markets, that will never be billable," Immergut told the American Lawyer. Firms in such situations may try to negotiate at least a partial payment, he said. "Sometimes you can get paid a little bit, but not 100 percent."

One lawyer told the publication that law firms will be reluctant to insist on strict payment terms since they will be competing for future work. “Law firms don't have a lot of leverage here," the lawyer said.