[ by Melanie Gretchen ] Oversized risk and highly leveraged bets are usually the domain of Wall Street traders, particularly when they have little skin in the game.  When law firms try and emulate their Wall Street clients, their results are usually much different from what they had expected  - and, more often than not, they end up shooting themselves in the foot - or worse yet, imploding.  A number of factors account for the differences - though 2 significant ones are: (i) when law firms bet big, they still retain "skin" or equity in the business; and, (ii) they're out of their "skin" or comfort zone - it's a business strategy they're not entirely comfortable or familiar with. Take Dewey & LeBoeuf, which could be "playing out the deck," as it teeters on the brink of bankruptcy.  The firm tried to live larger than life by leveraging themselves in order to bring on board some big rainmakers - who demanded and got some big guaranteed financial commitments from their new firms.  Yet, the partners didn't deliver revenue as promised - as BigLaw slumped across the board in response to a broken economy.  But the bank debt is still there and continues to loom larger than ever. Dewey is not the only firm to have misplayed its ill-timed hand at leveraging outsized amounts of debt against future revenues that never materialized.  The traditionally staid law firms, who expected to have little or no trouble paying off big debts in their expanded modes, never had a chance.  And in the process, they have changed the face of an industry forever - from low credit risk to one is just as vulnerable as everything and everyone else. A Not-So-Brave New World. In a quickly shifting landscape, law firms are no longer the safe bet they were.  Alan Hodgart, managing director of Huron Consulting Group's legal team said, "The idea that a law firm can't collapse and go broke is gone." As a result, law firms are being scrutinized by their banks, specifically potential and existing bowers, to dig deeper into a firm's financial information, performance results, and partner agreements.  "Many law firms are now being put under the microscope by their banks," said bankruptcy partner Charles Tatelbaum of Hinshaw & Culbertson LLP. In addition, Mr. Tatelbaum said banks are taking a harder line on firms' compliance with loan terms, more frequently enforcing such provisions as a requirement that the uncollected client bills that serve as loan collateral are no more than 3 or 4 months old. Going forward, banks may have to work with a law firm instead of abandoning it, according to Jacqueline Palank of the WSJ: "It is in the banks' interest to work with a law firm when trouble emerges rather than immediately pull the plug, because the debt is often secured by the client fees a firm expects to collect.  If it shuts down, not only does that cut off future bills, but it also makes it that much more important to collect bills outstanding." Expansion is over.  Change is up.  As legal consultant Peter Zeughauser said: "It's not your mother's legal industry anymore.  It's a tougher business." For further details, go to [WSJ, 4/30/12].