INFLATED CONCERNS - As recently as late December, corporate transactional lawyers were feelin’ groovy about their prospects heading into 2022, saying they expected the breakneck pace of deals to continue well into the new year. But less than a month later, not everyone is as optimistic. As Law.com’s Andrew Maloney reports, rising inflation has become a top concern for corporate CEOs, and now legal market analysts fear it will hurt large law firms, in part by cooling transactional activity. Kent Zimmermann, a consultant for Zeughauser Group, said most firm chairs and managing partners he’s spoken with aren’t talking about inflation directly but are wondering whether the Fed might try to temper inflation with a rate increase or two later this year and whether that will have an impact on white-hot corporate work that’s boosted Big Law throughout the pandemic. “I think that stands to reason given that, for a large group of firms that outperformed the market, and even some that didn’t outperform the market last year, their transactional practice was the largest driver of their performance,” Zimmermann said in an interview. “Because their transactional practice—most notably mergers and acquisitions and private equity work—was the largest driver, they’re very sensitive to any possibility that transactional activity will cool.”
MIDDLE MANAGEMENT - While Big Law’s in the trenches taking grenades, midsize firms might just be advancing toward victory in the talent war. As Law.com’s Lizzy McLellan writes in this week’s Barometer newsletter, a great proportion of firms outside the Am Law 200 benefited from increased demand and decreased expenses in 2021. Now, they’re investing in targeted growth and have a good story to tell both potential new hires and potential merger partners, the latter of which midsize firms have been increasingly seeking out as a means of strategically scaling up. “What many midsize firms have long offered is a defined culture and closer relationship between leadership and the rest of the firm,” McLellan writes. “For partners at small firms and boutiques who have enjoyed having an influence in how their firm operates, this can be more attractive than working in Big Law. That pitch becomes even better when it’s paired with a strong financial foundation bolstered by success in the most recent calendar year.” To receive the Law.com Barometer directly to your inbox each week, click here.