Banks won't tolerate problems at law firms: the collapse of Yoss

March 16, 2011 Yoss LLP has announced that it will close by 31 March, after negotiations with the firm’s bank broke down.

Coming after months of partner defections and payment cutoffs, commentators say that the collapse of the firm is an illustration that bankers’ tolerance for problems at law firms is at a low ebb.

"In the old days, if you had trouble, they would extend your credit. Today, they just call the loan," says Robert Jarvis, a law professor at Nova Southeastern University. "Banks have been re-evaluating the collateral that law firms have. If you go in with a book of business worth $1 million, banks used to give you maybe 90 percent. Now, it can be more like 50 percent."

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