The last-minute plan to avoid the “fiscal cliff” on January 1 left many central budget questions without permanent answers—and law firms, which reaped the benefits of this ambiguity during the past couple of months, are now predicting more work from clients uncertain about how to proceed. 

Firms benefited from the the lack of a resolution and the possibility of a failure to reach a deal in Washington—which could have led to significant, mandated tax hikes and spending cuts. As talks picked up steam, corporations worried about how to proceed as 2012 drew to a close caused a flood of activity for law offices preparing clients for various contingencies.

While the deal ended a possibly perilous fiscal situation for taxpayers, including corporations, big questions were left unanswered. For example, lawmakers voted to delay but not eliminate the possibility of a “sequestration”—mandated cuts divided between defense and non-defense programs.

David Ralston Jr., a Foley & Lardner partner who leads his firm’s government and public policy practice, said he is telling his clients to “batten down the hatches.” His firm represents government contractors including defense giant Raytheon Co.

Ralston said the decision to delay the sequester and doesn’t bode well for his clients. “I am…very concerned that the likelihood of the sequester has gone up,” he said.

Dan Bryant, a Covington & Burling partner who heads his firm’s public policy and government affairs practice, said companies need more clarity—not temporary fixes—from Congress. The remaining ambiguity, he noted, could well lead clients to continue to turn to the firm for answers.

“You can’t blame the business community for being uncertain how to invest and to plan when major patches of the economic and fiscal policy landscape remain so ambiguous,” Bryant wrote in an email. “They will certainly need wise counsel and effective advocacy in 2013!”

The measure that stopped a mix of mandated tax increases and spending cuts from taking effect on New Year’s Day included tax increases for U.S. households making more than $450,000 per year and continued unemployment benefits for 2 million Americans, among other provisions. But deals on sequestration and the $16.4 trillion debt ceiling were notably absent. Congress delayed the sequester for two months, which is about the same amount of time the government has to raise the debt ceiling to avoid defaulting on its bills.

“This fiscal cliff [legislation] was a poor substitute for a grand bargain,” said former Representative Philip English (R-Pa.), an Arent Fox senior government relations adviser who is a co-chairman of his firm’s government relations practice.

English said his firm was busy during the normally quiet week between Christmas and New Year’s Day providing advice to clients about the fiscal cliff.

Contact Andrew Ramonas at aramonas@alm.com.