The collapse of Lehman Brothers amid turmoil on Wall Street will provide rich pickings for top firms but spell tough times for the rest, analysts have warned.

While top firms win the big deals, consolidation of medium-sized firms is likely to accelerate, according to Jeremy Black, associate partner in the professional practices group at business advisory firm Deloitte.

The news came as research suggested top firms’ hourly billing rates were poised to plunge while general counsel were winning big discounts on legal costs.

Magic circle and big US firms have won the bulk of work flowing from the fallout, with legal advice being requested by national banks, regulators and administrators as well as the companies involved.

Tony Williams, principal at Jomati consultants, said: ‘In the short term, this will benefit the top 10 firms. All the big mandates have gone to them, and the big corporates will require scrutiny of their balance sheets, risk profiles and liquidity.’

Deloitte’s Black said: ‘The amounts of money are so huge that cost isn’t necessarily going to be the key driver. There’s so much at stake you’ve got to be certain you get the best people.

‘In comparison to the rest of the professional services sector, the legal world is very unusual in the number of medium-sized firms. This is going to be another force to drive [consolidation] up.’

William Arthur, principal at Fremont Consulting, said: ‘While firms could be exposed on real estate, if they’ve got a good litigation and insolvency practice, they have got a pretty good hedge.’

New research suggested that, following five years of growth, the hourly rates charged by top firms are no longer increasing – and general counsel are obtaining 10-30% discounts on these rates.

Costs lawyer Jim Diamond interviewed eight costs consultants at top-30 firms and 15 in-house counsel last month.