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The beginning of the economic downturn was a low point for lawyers in Jersey, as one partner explains: "There was a period when banking had dried up but companies weren't in enough trouble to need restructuring – or the banks just weren't doing anything about it – when one in four fee earners weren't doing anything."The market is no longer so quiet....

The beginning of the economic downturn was a low point for lawyers in Jersey, as one partner explains: "There was a period when banking had dried up but companies weren't in enough trouble to need restructuring – or the banks just weren't doing anything about it – when one in four fee earners weren't doing anything."

The market is no longer so quiet. And though the lack of financing is still squeezing the amount of new money deals, particularly in pure M&A, restructuring work is in full flow. "The practice is busy, but shifting to enforcement and insolvency work," says one partner, who adds: "But there is still the odd bit of prestige work out there as banks will still lend to the right client with the right covenants."

Towards the end of 2008, two new avenues of work opened up for Jersey lawyers. First was the migration of PLCs. These redomiciliations saw companies (many of which were listed on the FTSE250 or FTSE100) migrate, in most cases to Ireland, after establishing a Jersey holding company as the group's ultimate parent company. It was a fillip for the jurisdiction as a whole.

"They are using Jersey law because our companies law is very flexible," says one partner. "And it's quite nice that Jersey has been chosen on the basis of its law instead of tax, as they could have chosen Ireland."

The second stream of work was the resurgence of cash box structures, used by UK banks to raise capital as they tried to catch what little liquidity there was in the market.

But partners have also reported a more cautious approach by clients. "People are scrutinising our work more closely because legal advice now hits a company's bottom line," says one partner. "Clients are asking to view whole teams now, not just the partners, and vetting the whole team, which is pretty switched on of them. And we are being a lot more careful about the advice we give too, since people are a lot more litigious."

Fickle though clients may be, most partners would be grateful for a few more of them in banking. "Banking work is dead," says one partner. "I used to have six or seven new loan deals at any time, and now I have one – and that's one more than some of my colleagues have."

"For the last few years it's been boom time in funds," says one partner at a leading Jersey firm. "But the market we have now will establish those who are able to manage a fund through difficulty....

"For the last few years it's been boom time in funds," says one partner at a leading Jersey firm. "But the market we have now will establish those who are able to manage a fund through difficulty." No doubt the market conditions will stir things up among the legal profession too.

The trend for fund work in Jersey for the past year is one of sustained periods of restructuring and advisory work followed by short bursts of intense deal activity. "The few funds we are starting up have really tight time frames because they think they are hitting the market at just the right time and they don't want people stealing their ideas," says one partner.

Also, the Madoff case did the practice area few favours, inciting more aggressive due diligence and, for some, casting a negative light on the unregulated funds that came into effect in February 2008 and had been a popular addition to Jersey's regime.

"When unregulated funds came in to the market last year they were a huge success and everybody wanted to get involved, but now people are afraid of them," says one partner. "It's mostly because of Madoff; people now want to feel as though they are part of something regulated. People want total transparency; they want traditional, much more straightforward funds. People are suspicious of anything that looks too clever," says one partner.

But the panic has not been widespread. Jersey attracts a sophisticated clientele who know what they're buying into, and the speed to launch that the unregulated regime offers will see it remain an attractive option when the downturn ends and funds work picks up.

And though Jersey's mature market makes it difficult for up and coming funds practices to make an impact, the downturn has made clients more cost conscious and created an opportunity for change in the legal landscape. "The top tiers sound right for the amount of work they get from the City, but next year the next tier down may be more busy just because of their prices," says one client.