National groups representing thousands of General Motors Corp. (GM) and Chrysler LLC auto dealers have hired law firms to protect them against potential bankruptcy filings by the auto makers.

Lawyers also will advocate for GM franchise owners, who are under increasing pressure to go out of business as the auto maker races to downsize in an effort to avoid a government-led bankruptcy.

GM's National Dealer Council retained the law firm of Orrick Herrington & Sutcliffe LLP to help ensure dealers being forced to close get payouts they're owed from the auto maker, according to a memo sent to dealers.

The auto maker is looking to eliminate 2,600 dealers by 2010 as part of a recovery plan that aims to keep the company out of bankruptcy court by slashing costs and restructuring debt.

GM, which has said it expects minimal costs in reducing its dealer body, will inform dealers within the next two weeks whether they are among those marked to close.

"Under these circumstances, we believe it is critically important that action be taken on behalf of dealers," the letter to GM dealers said. "The best way to achieve this goal is for the (National Dealer Council) immediately to engage a major national law firm."

The firm will participate in negotiations with GM on dealers' behalf and work with lawyers retained by individual dealers. Dealers operate under contracts with auto makers that require the company to cover obligations, ties to warranty repairs, inventory buy downs and floorplan assistance payments.

It also will help the dealer council set up a Web site dealers can go to for regular updates on GM's restructuring or bankruptcy plans.

Chrysler's dealer council, meanwhile, has engaged the firm of Arnold & Porter LLP to represent its dealers in case the auto maker is forced to file for bankruptcy protection as early as Friday, several dealers said.

Chrysler is attempting to win union and creditor concessions and sign a merger deal with Italy's Fiat SpA in order to receive more U.S. government funding and avoid bankruptcy.

-By Sharon Terlep; 248-204-5532; sharon.terlep@dowjones.com.

-By Jeff Bennett, Dow Jones Newswires; (248) 204-5542; jeff.bennett@dowjones.com