President-elect Donald Trump pumps his fist during an election night rally, Wednesday, Nov. 9, 2016, in New York. (AP Photo/ Evan Vucci) (Evan Vucci)
As Americans alternatively rejoiced and recoiled over Donald Trump’s unexpected electoral victory on Wednesday, law firm leaders began to assess how the momentous change may affect their own firms’ bottom lines.
Nearly all said that Trump’s presidency will initially mean more work for many lawyers, with practice areas such as health care, tax, and international trade almost certainly poised for increased activity. Long-term repercussions are harder to predict, but few expect the status quo.
“The problem with anticipating this from a lawyer perspective is … you don’t know what [Trump's] policies are going to be,” said Michael Heller, the CEO of Cozen O’Connor. “Until you get a sense of where his policies are, I think it’s going to be difficult for law firms to make true, intelligent assessments.”
Trump’s campaign messages didn’t hew to conventional political lines on economic issues. While he embraced many policies favored by conservatives, such as lower taxes, he also talked about reinstating the Glass-Steagall Act, a position often favored by liberal critics of big banks.
“Because he has an agenda that is kind of unprecedented and untested, it does raise the prospect of significant legal needs in a variety of practices,” said Kim Koopersmith, chair of Akin Gump Strauss Hauer & Feld.
Trump has been clearer about his intentions in some areas than others. He has vowed to eliminate the Affordable Care Act, which would unleash a host of changes in health care law. Ira Coleman, who heads the health practice at McDermott, Will & Emery and will take over as firm chairman at the start of next year, said he’s preparing for things to be busy.
“We have a $3 trillion health care industry that is heavily regulated,” he said. “For Big Law, changes to the regulatory and legal environment are always good for business.”
Elizabeth Halpern, a partner in the health law practice of Hogan Lovells, said she spent all Wednesday morning answering questions from clients. Lawyers in her field are used to change, she said. “Every five to seven years we have some big legislative change,” she said.
Even if the Affordable Care Act is repealed or cut back, Halpern said she still expects significant activity. “There are concerns about fraud and abuse and I don’t really see much interest in getting rid of the regulation of that,” she said. “Regulation doesn’t dry up because there’s a Republican administration. It just might change form.”
Finance and M&A
Mergers and acquisitions may be one area that is disrupted in the short term. Ed Batts, co-head of Orrick, Herrington & Sutcliffe’s global M&A practice, said he’d expect many companies to take a brief pause when it comes to potential transactions.
If Trump follows through on a plan to offer a lower corporate tax rate for companies that repatriate some of their offshore cash into the United States, it could put a damper on the types of inversion deals that have kept many tax and transactional lawyers busy in recent years. But it could also open up new types of deals. ”From my practice group level … this is going to be an interesting change,” Batts said.
Douglas Doetsch, the head of Mayer Brown’s Latin America/Caribbean practice and co-head of its global banking and finance practice, also fielded calls from clients Wednesday morning. “It’s a surprise in Latin America, and an unwelcome surprise,” said Doetsch about Trump’s election. Mayer Brown has an affiliate with about 180 lawyers in Brazil and an eight-person office in Mexico City that focuses on infrastructure and energy.
David Shine, the chair of Paul Hastings’ M&A practice in New York, agreed that the conventional wisdom is that deals tend to dry up in times of uncertainty. But he said there are reasons think companies will have more money for mergers in the coming years.
“In the short term there’s going to be a lull in M&A and everyone’s going to sit still,” Shine said. Still, he said, volatility in the market may make the Federal Reserve less likely to raise interest rates. And Trump has spoken of lowering corporate income tax and lightening regulations, all changes that could be good news for M&A lawyers.
“We’re not thinking about cutting back,” Shine said. “We’re not particularly staffing up either. We think we’ll be in a good place.”
Pedro Freyre, chair of Akerman’s international practice, said he sees an opportunity to for more project construction involving the U.S. government.
“There is a bipartisan consensus that rebuilding American infrastructure is key,” he said. “You may see foreign players there that do construction all over the world trying to get into the game.”
When it comes to specific antitrust policies, Trump has said little. “Anyone who tells you they know what’s coming in antitrust enforcement in a Trump administration is making it up,” said David Wales, the head of the antitrust practice at Jones Day. He pointed out that Trump has voiced his opposition to the proposed Time Warner/AT&T merger, saying it concentrates too much power. (Jones Day is not involved in that deal.)
Wales said it’s highly unlikely that the Time Warner deal would be cleared before Trump takes office, leaving the merger’s fate with Trump. “Trump will have to decide if he will continue that populist view of antitrust enforcement or go back to solid economics.”
Recent months have seen many firms taking steps to bulk up their antitrust practices, as the Federal Trade Commission and Department of Justice have challenged deals. Boies, Schiller & Flexner antitrust partner Richard Feinstein, a former director of the FTC’s Bureau of Competition, said he doesn’t expect a Trump presidency will spell a major change of course.
“He certainly showed signs during the campaign of wanting to be pretty aggressive in antitrust enforcement,” Feinstein said. ”I don’t think there’s any reason to assume that antirust activity will necessarily decline.”
Opposition to Chinese imports and the North American Free Trade Agreement were both hallmarks of Trump’s candidacy. Manufacturers in North America are particularly unsettled about the fate of NAFTA, which Trump attacked during his campaign, and the possibility of tariffs for Mexican imports, said Mayer Brown’s Doetsch. He said he doesn’t believe Trump will kill the agreement, and said he is more likely to renegotiate it.
“But no one really knows what Trump really believes,” Doetsch said. “It’s very difficult to separate his campaign rhetoric from real policy. I think there is tremendous uncertainty.”
Uncertainty can sometimes be a boon for lawyers, Akin Gump’s Koopersmith noted.
“I think that the short- to medium-term outlook is that implementing alternative trade structures is going to be a very labor-intensive process,” she said. Koopersmith said she doesn’t think Trump’s comments about reducing the flow of Chinese imports will hurt the firm’s overseas offices, including its Hong Kong office.
Clients in Europe and Germany were already dealing with uncertainty over Brexit. Dieter Schmitz, an M&A partner at Baker & McKenzie who specializes in cross-border deals involving Europe and Germany, said he’s had to reassure European clients confused by Trump’s presidency. His response: “Don’t be surprised by surprises.”
“I lived in Germany when Ronald Reagan was the president, and everyone said, ‘How can an actor be president of United States?’” he said. “I lived in Europe when Jimmy Carter was president, and they asked, ‘How can a peanut farmer be president?’ And folks ask, ‘How can Donald Trump become president?’ And every time I say, ‘That’s what democracy allows people to do.’”
Markets and businesspeople would adjust to a Trump presidency in the same way they’re adjusting to Brexit, he said. “You have to assume every single day that there will be something that rocks you,” he said.