Big Law Outloook Forum

[AureliusCapital]

What are your thoughts on the outlook of big law in the next 2-3 years? Markets are all over the place right now and with the war and covid still lingering, everything is uncertain. Think we are heading for a repeat of 08 or just a general slow down in our work with no to minimal cuts?

[Sackboy]

COVID is pretty much over, so I'd just disregard that. Even if a new bad strain come back, biglaw and the global economy has shown it can deal with that (supply chain issues aside).

The war seems pretty self-contained. Russia wants Ukraine. The West doesn't want to directly engage Russian troops. So, the West will load up Ukraine with billions of dollars of weapons and sanction the shit out of Russia. This has affected oil prices, but that's probably the extent of that. Also, who knows, if nobody is buying Russian oil in the West maybe the U.S., Canada, OPEC, or South America will amp up supply and ultimately drive prices down back to normal.

Of course, I am an optimist, so who really knows.

[Anonymous User]

What are your thoughts on the outlook of big law in the next 2-3 years? Markets are all over the place right now and with the war and covid still lingering, everything is uncertain. Think we are heading for a repeat of 08 or just a general slow down in our work with no to minimal cuts?

I think Covid and the Russia thing are non-issues, really. To me the major issue is just the massive level of attrition biglaw firms are facing at every level, including partners, and the rapid cultural change where attorneys are quite happy to lateral over and over again in search of more cash or less misery. I don't know how the top firms can maintain their quality standard and talent pipeline with this level of churn.

[Anonymous User]

Idk I disagree with the two above. I see the outlook like this: There's no reason to believe covid is over other than wishful thinking. Hasn't been a change in the waning of immunity, no newly developed vaccines, no reason to believe when fall rolls around it will be any different than the last 3 times the government tried to convince us covid wasn't a threat so we'd go back to our cubicles for their tax purposes.

Nothing spreads plague and disease like war and refugee crises -- another strain is likely in the winter anyway since most of the (entire) world is unvaccinated. The endemic aspect likely means people will do winter work from home anyway. Russia will, I think, have an outsized impact on the economy by raising gas prices so much so at the same time the Fed wants to wiggle out of raising rates and stopping QE. They'll give a few rate hikes but inflation will stay on the rise because of mounting gas prices and be stuck with either deciding to raise them to the height that's needed to control inflation or to do virtually nothing and kill the last of the American Middle class. China's economic slowdown is drastic and will have unavoidable impacts on the global economy, particularly Europe. Ukraine is the 5th largest wheat producer and Russia exports a large amount of food (potatoes, etc., northern climate crops) both of which will be taken offline by the war. China's extreme flooding year after year has destroyed their grain production and large flu across their herds have reduced their meat supplies. Likely governments like Russia and China that produce the largest amount of fertilizer compounds will reduce exports of both meaning farmers may plant without fertilizer or have to significantly raise costs of output to get it. Food prices spike, supplies drop = famines across poorer regions of the globe.

I see a positive outlook for counter-cyclical/bankruptcy practices (my area) and less positive impacts for boom time groups.

[TUwave]

Idk I disagree with the two above. I see the outlook like this: There's no reason to believe covid is over other than wishful thinking. Hasn't been a change in the waning of immunity, no newly developed vaccines, no reason to believe when fall rolls around it will be any different than the last 3 times the government tried to convince us covid wasn't a threat so we'd go back to our cubicles for their tax purposes.

Nothing spreads plague and disease like war and refugee crises -- another strain is likely in the winter anyway since most of the (entire) world is unvaccinated. The endemic aspect likely means people will do winter work from home anyway. Russia will, I think, have an outsized impact on the economy by raising gas prices so much so at the same time the Fed wants to wiggle out of raising rates and stopping QE. They'll give a few rate hikes but inflation will stay on the rise because of mounting gas prices and be stuck with either deciding to raise them to the height of the need to be to control inflation or to do virtually nothing and kill the last of the American Middle class. China's economic slowdown is drastic and will have unavoidable impacts on the global economy, particularly Europe. Ukraine is the 5th largest wheat producer and Russia exports a large amount of food (potatoes, etc., northern climate crops) both of which will be taken offline by the war. China's extreme flooding year after year has destroyed their grain production and large flu across their herds have reduced their meat supplies. Likely governments like Russia and China that produce the largest amount of fertilizer compounds will reduce exports of both meaning farmers may plant without fertilizer or have to significantly raise costs of output to get it. Food prices spike, supplies drop = famines across poorer regions of the globe.

I see a positive outlook for counter-cyclical/bankruptcy practices (my area) and less positive impacts for boom time groups.

Spoken like a true bankruptcy lawyer.

[RedNewJersey]

I don't see why COVID, an up-and-down stock market or the war in Ukraine would harm biglaw. COVID (and the contemporaneous market crash) has coincided with one of the most remarkable growth periods ever for biglaw, and if anything has made law firms more flexible and resilient (and reduced costs). The war means sanctions (which helps some lawyers), and high gas prices (which will mean a boom in Houston and other energy-related markets). There are a number of areas that will get better and better as enforcement continues to ramp up: antitrust, white collar, regulatory practices, etc.

If there's a slowdown, it would be due to some other reason--for example, as interest rates go up, maybe mergers and financing of all sorts become less attractive (dunno). Without a specific theory for why the next few years would be different from the previous 2, I'd predict even more growth in the top tier. The salary increases indicate biglaw firms do not predict a substantial downturn.

[Anonymous User]

Any perspective on bigtech and antirust pressure from the Biden Administration and how that would affect the whole economy (~1/3 of which is tech)?

How about inflation and change in interest rate? I see it briefly discussed above. Biglaw's salary hike is evidently bullish on the near-future market outlook.

[Sackboy]

Any perspective on bigtech and antirust pressure from the Biden Administration and how that would affect the whole economy (~1/3 of which is tech)?

How about inflation and change in interest rate? I see it briefly discussed above. Biglaw's salary hike is evidently bullish on the near-future market outlook.

Of all of the things you mentioned, interest rates are the biggest potential risk to biglaw work. Biden's antitrust hasn't shown any teeth yet, and they're only going to have the capacity to go after the big names like Google. That will chill the rest of the market to some degree, but there shouldn't be any real concern for anyone that isn't truly a household name. Inflation clearly hasn't been harmful to corporate profits, so there is no clear reason why it should harm biglaw. Our clients should continue to be fine as long, as the middle class doesn't collapse. Interest rates are the biggest danger, because they affect the ability to get cheap debt to make a lot of these deals or for Company's to tap into affordable lines of capital to grow.

[Anonymous User]

Any perspective on bigtech and antirust pressure from the Biden Administration and how that would affect the whole economy (~1/3 of which is tech)?

it's 100% making it more complicated to do deals (ask any M&A lawyer doing PubCo/PubCo transactions past year). but that's not necessarily bad for BigLaw (and for the economy generally, who knows)