There is no doubt that the first half of 2009 has been one of the bleakest periods the legal marketplace has seen. Lawyers at all levels of seniority have been laid off, partners have been de-equitized, new associates have had their start dates deferred and offers rescinded, and summer associates have seen their programs cut back and their prospects of receiving offers of permanent employment severely diminished. Many lawyers who remain employed have had their compensation reduced. Lateral attorney hiring has slowed significantly, except for partners with significant books of portable business.
However, as we enter the second half of 2009, we see some glimmers of hope. According to the second quarter Citi Private Bank Law Watch Managing Partner Confidence Index, there is a “strong sense” that the worst of the recession is over and there are “some positive signs” for the outlook of the legal market. They see stability, but “little or no growth” over the next 12 months, however, before there is real improvement. Lawyer layoffs have been slowing, but just over a third of the managing partners surveyed expected to cut more associates and non-equity partners if costs increase and the demand for legal services does not keep up. On the bright side, just over a quarter expect their firms to grow at the associate level.
Currently, smaller and mid-sized firms are seeing this lean environment as an opportunity to upgrade their talent, with so many downsized big firm attorneys on the market. We also are seeing a few of the larger firms starting to hire selectively in their corporate, finance, and litigation associate ranks. They can afford to be especially picky however, as the available candidates still significantly outnumber the opportunities.
Areas of practice that have remained the strongest throughout this downturn are labor and employment as downsized workers are suing their former employers and intellectual property as businesses are jealously guarding their assets. Bankruptcy lawyers, especially on the East Coast where many of the largest corporate reorganizations are being handled, have been busy.
Looking towards the future, the Obama administration’s proposed new policies and priorities will determine what legal services will be in demand over the next several years. Any new regulatory scheme brings with it legal advisory work in its interpretation and application, in addition to litigation to hammer out the tough questions. Moreover, new attitudes towards either stricter or more relaxed enforcement of existing laws also can affect activity in various areas of practice.
In the wake of the Wall Street collapse, subprime mortgage crisis, and various corporate scandals, stricter enforcement of securities and antitrust laws will increase demand for investigations and litigation. Bailouts, stimulus packages, and similar new federal programs may not be creating as many new jobs as quickly as hoped, but will change the nature of legal advice given and the types of transactions being handled by lawyers nonetheless.
Recent and proposed changes to the bankruptcy and credit laws, as well as the tax code will keep lawyers busy during the revision process, as well as throughout their implementation and any resulting litigation. Tax planning and corporate lawyers will be called upon to assist businesses in navigating these new regulations to their greatest advantage.
The legal market may pick up as the country moves forward in its efforts to reduce its reliance on foreign oil, invest in renewable energy and green technologies, and improve the infrastructure. All of these goals are being promoted in part by various proposed tax credits and incentives. Thus, lawyers practicing in energy, public and private finance, environmental law, and so forth, must be cognizant of the new regulations and priorities and garner tax expertise before advising clients regarding business transactions and strategies. Similarly, various alternative responses to the national health insurance crisis are being hotly debated. Healthcare attorneys must stay abreast of the changes as their practices will feel the impact of any new regulatory scheme that ultimately is adopted.
The Obama administration’s promise to invest in science, including biomedical, stem cell, and green technology research and development, will lead to new products thus increasing the demand for legal services in patent prosecution, licensing, trademark, financing, entity formation, and commercialization issues. Emerging technologies also will pose some interesting new legal questions and will involve a wide range of laws and regulations from international trade, treaties governing chemical and biological weapons, to health, safety and environmental impact. Furthermore, existing laws may not squarely cover all future applications of new technologies and open questions will leave plenty of room for lawyers to operate and exert their influence.
To position yourself to take advantage of these glimmers of hope, you must stay abreast of the constantly changing situation regarding trends in the business world and legal profession generally as well as in various areas of practice. You must read the general newspaper, Wall Street Journal and other business journals, the local and national legal press—either in hard copy or online—as well as blogs such as Above the Law, and law firm and company websites. You need to know where the action is so you can be there.