As the financial crisis deepens, how have law firms been reacting to the measures being taken? There is a huge amount at stake out there not least for some of the prime economic principles that have defined growth (or a rather large bubble) for the last decade, or last half century even (depending on which pundit you are inclined to listen to).

The recent implosion of the Labour Government seems to have been, to some extent, reversed by the handling of the turmoil in the last week or two. According to Legal Week one partner at a top 25 UK law firm said: “Thank God that Gordon Brown is at the helm right now. The suggestion that Brown presided over a decade of irresponsibility is risible — it was an all-parties’ consensus which allowed the credit boom. The directors of the Financial Services Authority are the ones who should be beaten publicly and painfully with a spiral-bound 200-page derivatives contract.”

Fair comment…?

Whilst the Government’s historic £400bn bank rescue package has received widespread support in City firms and elsewhere, it will mean partial nationalisation of large parts of the UK financial system. So much for the free market principles that created the boom from which so many firms have prospered in recent years but desparate times require desparate measures.

Coming to which. It is understood that Barclays is set to introduce a new loan product specifically to help law firms over the coming months as many begin to feel the pain. The short-term debt product is designed to help firms struggling with their cashflow to pay their VAT and professional indemnity fees.

Even partner distributions are being delayed to avoid the expense of incurring more debt, and many firms are dipping into overdrafts to meet expenses.

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