For those working in Biglaw, there was nothing “big” about the Great Recession. Thousands of associates were laid off, employees were postponed for employees, and law students had their offers withdrawn. Eventually, it took Biglaw years to recover, and it was far from a painless endeavor. And let’s not forget the recession caused by the coronavirus crisis of 2020, when Biglaw companies managed their expenses using measures to reduce the costs of salary reductions, holidays, layoffs and hidden layoffs of associates. This wasn’t a picnic either.
But what will happen when the next recession comes? Are these companies ready to face what could happen next?
At the moment, Biglaw companies are in an unprecedented wave of financial success post-pandemic, and the associates are earning big money in terms of increasing salaries and bonuses. Things seem to be going very well, but the darkness is looming on the horizon, with economists predicting bad times in the future. How are law firms preparing for a possible economic downturn? The American lawyer has the details:
In the event of a downturn, law firm leaders and industry observers said, the office opening rate and talent competition are expected to slow, while focusing more on countercyclical practice. This dynamic could also put pressure on billing rates and shift some of the leverage from employees and back to law firms to issues such as compensation and whether staff can work remotely, industry observers added. .
Already, the battle for top talent has slowed down a bit, as law firms offer fewer sign-up bonuses than last year, and firms show less appetite for hiring large numbers of associates simultaneously, recruiters say.
So what practice areas should be prepared for the spotlight? Bill Josten, strategic content manager for Thomson Reuters, which oversees the law firm’s financial index, has information on:
Disputes, in general, are often considered a countercyclical practice, and demand in that area has almost returned to where it was in 2019, during the “maximum level”, he added. Insurance work is also generally considered evergreen. And in addition to bankruptcy, some other areas could be prepared for growth during a recession.
“Real estate practices have been strong. Tax practices have shown signs of going back and forth, but with taxes, there is a potential advantage. Regulation and compliance have great potential for expansion, especially globally, ”said Josten. “So there are areas where companies could focus.”
While some Biglaw leaders are trying to put their eggs in one basket to prepare for the worst, others are a little more optimistic about the economy. Take, for example, John Quinn of Quinn Emanuel, who recently told Am Law that he thinks “good times are over.” In fact, he said, “I think law firms are still very busy looking to recruit.”
No matter where your Biglaw leader is - whether he’s wearing rose-colored glasses or preparing for economic disaster - they seem more prepared to deal with financial problems than ever before because of what they’ve learned during past recessions. . We hope that this means that layoffs of all kinds will be kept to a minimum if a recession occurs, but if things start to deteriorate, you know where to contact us.
Is Big Law Ready for a Recession? [American Lawyer]
Staci Zaretsky is a senior editor at Above the Law, where she has been working since 2011. She would love to hear from you, so feel free to email her with any tips, questions, comments or criticisms. You can follow her on Twitter or connect with her on LinkedIn.