EmploymentCrossing.com

For years law firms have aspired to open offices in New York City. An address in the Big Apple was viewed as the ultimate status symbol for firms.

Associate salaries nationwide skyrocketed to meet Manhattan norms. Firms merged or rearranged themselves to stress their New York credentials, however slight. Partners elsewhere were squeezed to pay millions to big-name New York laterals.

But now Wall Street is being decimated by an unprecedented crisis likely to restrain the financial sector for years to come. Overexpansion, especially in New York, has been cited in the deaths of San Francisco firms Thelen and Heller Ehrman.

But Ralph Baxter, chairman of San Francisco's Orrick, Herrington & Sutcliffe, says firms will still seek to realize their dreams of a Manhattan presence – they have no choice.

"There will be some adjustment," he said. "But there's really no way to be an American-origin firm that has anything to do with capital markets and finance without being in New York in a serious way."

Baxter and the heads of most other large firms founded outside of New York have long believed the future of the profession will lie with a small group of global mega-firms that can straddle the major financial centers of New York, London and Hong Kong.

This widely held view is a sign of how closely large law firms see their fortunes aligned with those of global financial institutions. But it is precisely those institutions now facing a wrenching round of consolidation and collapse.