When it comes to law firm business, not everyone is depressed about the slow growth that plagued many firms in 2017, and that’s predicted to persist into the new year. Or at least they won’t admit it.
There’s plenty to look forward to in 2018, according to partners at two of the largest Am Law 100 firms.
“It’s a complete lack of what one would have expected,” said Roger Meltzer, the global and Americas co-chairman of 3,600-lawyer DLA Piper, referring to year-old concerns that Donald Trump’s unexpected election win and the U.K.’s Brexit vote would depress economies.
“You might have thought they would have created a downturn, but it’s created an updraft,” said Meltzer, whose firm made 58 lateral hires in 2017.
The DLA co-chairman expects a rise in corporate transactional work due to “very robust capital markets” and an increase in M&A, including in the middle market. With the U.S. Federal Reserve Bank raising interest rates, based on a bolstered economy, Meltzer said, “the only question will be if people pull back a little bit as a result.”
When it comes to litigation, Meltzer pointed to “more aggressive enforcement going on in Brussels” by European regulators, suggesting international activity could help counter any domestic decline in demand under a regulatory-averse Trump administration.
Still, the pre-2008 days are clearly gone, Meltzer said. “Law firms have pivoted away from commoditized work to the higher end of the market,” he said. And they need to continue that march, developing “deep sector expertise,” he said.
Clients want to hire “not just a lawyer that will be good in court,” but “thought leaders” who can offer “prophylactic” strategies to limit their risk, Meltzer said.
Ora Fisher, one of two vice chairs at Latham & Watkins and a member of the more than 2,600-lawyer firm’s executive committee, also expects good times to persist. “Assuming the global economy continues to grow, we see a whole lot of demand for our transactional practices and all the related practices that support them,” Fisher forecasted.
In 2017, her firm has hired some 30 laterals, and Fisher expects that pace to continue in 2018. “We are always looking for strong talent,” she said.
In addition to transactional work, Fisher said she expects a rise in demand for complex trial litigation, white-collar criminal defense work, privacy and cybersecurity matters, and financial regulatory work globally.
The Latham and DLA leaders’ economic enthusiasm about the New Year runs counter to what analysts generally have predicted: specifically, more tough sledding for the legal business in 2018, particularly for middle-market firms.
The slow-growth market for legal services will not abate next year, according to a recent report from Citi Private Bank’s Law Firm Group. And that will not be the only challenge facing managing partners as partners age and more competitors squeeze onto their turf, the report concluded. Co-authored by Hildebrandt Consulting, the report forecasts mid-single digit growth in revenue and profits per equity partner in 2018.