Law firms have 'another risk to contemplate' after failure of bank that catered to their needs
Signature Bank in New York City on March 13. Photo by Steve Sanchez/Sipa USA via the Associated Press.
The failure of Signature Bank in New York could lead to delays in accessing capital by the many midsize law firms that used its services, despite the government’s takeover of the financial institution, according to reporting by Law.com.
Signature Bank had “long specialized in providing banking services to law firms,” according to a report by the New York Times that was noted by Above the Law.
Sources told Law.com that Signature Bank was “a significant player” for financing personal injury firms, and that its modest fees were attractive for real estate firms and other practices that relied on escrow accounts.
Even firms that didn’t use Signature Bank “now have another risk to contemplate and plan for in an environment that was already awash in uncertainty,” Law.com reported. “Law firms may face an erosion of confidence in smaller or regional banks, said banking experts and consultants, and some may move their banking business to larger institutions.”
A shareholder lawsuit filed Tuesday against Signature Bank and its top officials alleges that bank executives misled investors when it touted its “strong financial position” a few days before its shutdown, according to Law360. The suit was filed on behalf of investor Matthew Schaeffer by the Rosen Law Firm, the same firm that sued the parent of the Silicon Valley Bank after its failure.
Law.com, Law360 and Reuters had coverage.