Tuesday’s presidential and congressional election results were a victory for lawyers across a spectrum of practice areas that will benefit from a continued focus on regulatory enforcement, the unrolling of health care reform and a general wiping away of the uncertainty that comes with a contested election cycle.
A number of lawyers have said they expect to be busier in the coming months and years than they would have been if Republican presidential candidate Mitt Romney had won on Tuesday.
Even practices such as mergers and acquisitions that often spike higher when a Republican is in the White House are expected to see a short burst of energy before the end of the year, followed by steady growth moving forward, lawyers have said.
Howard Schweitzer is a managing partner of Cozen O’Connor Public Strategies in Washington. While the election ended in a “status quo” result in which President Obama held onto his post and the Democrats held onto the Senate, Schweitzer said there is one difference that will keep a bit of uncertainty looming in and outside of the Beltway for the next few months — the so-called “fiscal cliff.”
The fiscal cliff involves the expiration of tax cuts and the increase in cuts to government spending in 2013. Schweitzer said some economists have predicted the country will go into recession, or off the cliff, if this all happens. When Congress reconvenes next week, Schweitzer said, there will be some political brinkmanship, but he ultimately expects both parties to work together to find a short-term solution to avoid the fiscal cliff. He said he then expects a longer-term solution to be worked out over the course of 2013. These are issues that could keep tax lawyers busy.
Such a political climate will create uncertainty for the rest of the year, but bring greater confidence to the business community moving into next year, Schweitzer said.
On a more micro-level, Schweitzer noted, Obama has a stronger commitment to regulating business than Romney would have had. Practices related to the environment, health care, financial services and other regulated industries will “continue to be living in an intense and dynamic regulatory environment and I think businesses will continue to look to lawyers to sort through that,” Schweitzer said.
Corporate Keeping Busy
Fear of the fiscal cliff isn’t keeping the mergers and acquisitions practice of William G. Lawlor and his Dechert colleagues from seeing a flurry of deal activity.
“If Romney had won, there would have really been an unleashing of animal spirits of M&A of the sort we saw back in the Reagan era,” Lawlor said. “Now we will see a steadier, flatter upward arc of M&A activity.”
The election results have created both short- and long-term scenarios for corporate practices moving forward, Lawlor said.
In the short-term, the pending expiration of the Bush tax cuts are causing a lot of activity in the deal market for companies looking to close deals by the end of the year. Lawlor said some companies are looking to close right away while others will wait a few weeks and gauge the temperature between Obama and Congress before closing by year’s end.
Confidence of corporate executives is about 75 percent of what makes the deal market boom or bust, Lawlor said. And in the intermediate term, how Obama and the Republicans work together will play big into whether deals continue to increase. If the two sides show they can work together and there isn’t big trouble in the eurozone, deals will start to pick up, he said.
Looking out a bit further, Lawlor said, there are a number of indicators in place to show a strong deal market on the horizon. That includes a number of private equity deals that are looming considering so many private equity companies made investments a few years ago in which they are looking to see returns, he said. Companies also have a “huge” amount of cash on hand that has to go somewhere or shareholders will start demanding answers, Lawlor said.
Whether these deals are in the United States or elsewhere will depend on the value of the dollar and the regulatory environment, Lawlor said.
Health Care Getting Hotter
Litigators, regulatory lawyers and corporate attorneys will all have their chance at a piece of the health care pie.
Now that it is certain there will be no repeal of Obama’s Patient Protection and Affordable Care Act, the health care industry will begin implementing the necessary changes even more than it already has.
“If Romney won and Republicans got control of the Senate and the bill was [repealed], then much like during the [U.S.] Supreme Court hearing, everyone would have sat still and done nothing,” said Buchanan Ingersoll & Rooney health care shareholder Stanley J. Milavec Jr.
Milavec said he thinks health care lawyers will be busier under the political construct that resulted from Tuesday’s elections. Very few lawyers would have been involved in a Romney repeal effort, where as many attorneys will be needed to implement, or challenge, the overhaul of the system envisioned under the ACA.
Now that there is certainty the act will remain in place, hospitals and physicians groups will continue with greater force to make good on the law’s accountable care organization requirements. That requires creating health systems that provide a wider range of care across the spectrum of a person’s life. He said advancement of those deals will keep health care transactional lawyers busy.
The election results will barely have settled in come November 16, at which point state officials have to submit blueprints for their insurance exchanges. Milavec said some states will comply and others won’t and will wait to see what the consequences are. The larger lesson is that there will be some parts of the act that continue to be controversial and may result in litigation, Milavec said.
There are a number of regulations that still need to be implemented and in general just a “tremendous” amount of work for health care lawyers, he said.
“It will be an overhaul of the entire U.S. health care system,” Milavec said. “That will take years to design and implement and that will require the services of health care lawyers.”
The banking and financial services sector is yet another highly regulated industry that will spawn a greater amount of work for attorneys under the second-term Obama administration.
“If Romney had been elected, there would more than likely have been an effort to either minimize the scope of the enforcement of the Consumer Financial Protection Bureau or possibly eliminate it all together,” according to Valentino F. DiGiorgio III, co-chairman of Stradley Ronon Stevens & Young’s banking and financial services group.
Under the Obama administration, DiGiorgio said, the industry will continue to have “a very large and unprecedented-in-scope regulator” in the CFPB that still has dozens of regulations yet to promulgate. That will keep banking lawyers very busy, he said.
And fund advisers will now be regulated under commodity regulations as well as by the Securities and Exchange Commission, which is another thing that will help banking lawyers bill hours, DiGiorgio noted.
He said law firms will have to invest a lot of time in keeping up with, and understanding, the new regulations. He noted less than half of the Dodd-Frank Act’s regulations have been brought forward.
Labor and Employment
Labor lawyers have expressed for months the increasing oversight of the National Labor Relations Board under the Obama administration. The board has looked to expand its reach beyond unionized employees to those who are not part of a union.
And on the employment law side, the layoffs that occurred a few years back are making their way through the administrative process and now into the courts. Class actions and single-plaintiff cases are both booming.
Paul Lancaster Adams, managing partner of the Philadelphia office of employment boutique Ogletree Deakins, said he would anticipate more cooperation between the parties post-election. That could result in increased legislation, such as passage of the American Jobs Act, which would bar discrimination against unemployed job applicants.
Adams said he doesn’t see a slow down in employment litigation in the short term as the only thing that will cure that is getting more people back to work.
Ballard Spahr labor and employment lawyer Steven W. Suflas said in September that NLRB cases would have been dramatically affected had Romney been elected.
“If it is a Republican White House, you’re going to see a tremendous change in this area. All of these NLRB cases will be reversed,” Suflas said in September. “As a practitioner, I think that all lawyers who practice in the NLRB space would really like to just have some predictability and right now there’s not.”
Labor lawyers said in advance of the election that they hoped an Obama win would mean recess appointments to the NLRB would be replaced with a fully constituted board that would lend that certainty to labor law.
One thing that is certain is that this “status quo” election result could mean big bucks to law firms in the right practices.