Big Oil, Big Financial Distress - Its Law Firms Insulated from the Catastrophe

 Back in 2022, there were those "monster profits"in Big Oil. That generated lots of transactional work for large law firms. At the top of the list was M&A. 

Now, as crude prices plunge and there are no signs of a recovery, Big Oil is conducting mass layoffs and could eventually cut the dividend. This is a scary time for labor and investors. In addition, contractors are also being financially undone. One vendor I coach has been trying to collect on a $75,000 invoice for months.

But Big Law which has as major clients large oil corporations may not experience too much pain. History shows that a downturn in the oil patch ususally results in a shift of work for law firms. Not a collapse.

For example, in its article on the the oil recession in 2016 - "The 7 Stages of Grief" - Kirkland & Ellis described fewer M&A assignments and more work in restructuring. Crude prices had dropped from $100 a barrel to $30. Of course, the disruption, though, affected the mood of energy lawyers.

Well, if any oil-patch attorneys are feeling negative they probably don't have to fear catastrophe. For example, Paul, Weiss which has had as clients Chevron and Exxon is well positioned. With its sustained high Profits Per Equity Partner it could endure a haircut on billing as financially distressed clients might pressure for discounts. But more assignments for regulatory matters, restructuring and litigation can emerge to replace the standard work in M&A. 

In addition, Paul, Weiss has been diversified since its current chair Brad Karp became leader in 2008. He reset the firm from a stand-alone practice in Wall Street litigation to also developing broad areas of transactional.

Meanwhile, another matter which might be triggering a 7 stages of grief among myriad lawyers is the possibibility of Smoot-Hawley 2.0. Some law firms could be wiped out. Here is my weekend posting on the implications of intensified protectionism and a trade war. Today, though, another shoe didn't drop after Friday's near 900 point drop in the Dow. Futures are up 400 points since the Truth Social post celebrated that all is fine with China.

Confidential tips about Paul, Weiss are welcome as well as bylined articles. Please contact Jane Genova janegenova374@gmail, text 203-468-8579.

Thrown off your game, maybe the first time since you started working? You made all the right moves and then the world moved in another direction.

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