Many fear credit crunch will strike legal departments next as 52,000 jobs go in latest big-bank cutback

Banking lawyers have expressed concern that the prolonged economic turmoil will lead to further in-house job cuts, as Citigroup this month became the latest bank to announce redundancies.

Fifty-two thousand jobs will go at the bank worldwide on top of the 23,000 redundancies made earlier this year – equating to a 20% reduction in headcount over the period.

The cull follows a similar review earlier this month at Morgan Stanley, which is expected to lead to 3,600 losses, while Goldman Sachs looks set to cut 3,300 jobs following its announcement in October.

In addition, Lloyds TSB has confirmed there will be substantial job losses due to its integration with HBOS while Royal Bank of Scotland this month announced plans to cut 3,000 jobs.

Citi refused to confirm whether legal positions will be affected by the redundancies but there is renewed concern among in-house lawyers that jobs will be increasingly under threat.

Staff cuts among bankers at Nomura in July led to two job losses in the legal team and it is understood that similar legal cuts occurred following banker redundancies at Barclays Capital during the same month. Several general counsel at top banks, who asked not to be named, said it was inevitable that redundancies among bankers would lead to a reduction in head count in legal departments.

One general counsel said: "Some sectors within the banking world have hit the wall and it is likely to have a knock-on effect on the legal staff. Structured finance, derivatives and property are all in trouble. The question is whether the legal profession can weather the storm? Things are obviously going to get worse."

However, some lawyers are optimistic that the losses within core legal teams could be minimal even if those lawyers working within transactional departments are likely to be at greater risk.

One former in-house lawyer, now a partner at a City firm, said: "I would be surprised if there were any significant redundancies in legal teams. On the other hand, those in-house lawyers in the trenches, in an execution or transaction management role, may be feeling more exposed if their particular business area isn't busy."

Sophie Spencer, a recruitment consultant with Barclay Simpson, said: "In-house lawyers seem nervous but with many banks now having completed their round of redundancies, the lawyers who have held on to their jobs feel more secure than they did a month ago. The situation remains stressful as no-one can tell what next year holds."