Gillman Market Barometer

Updated February 2023.

Maybe instead of “recession,” the more appropriate term for this economic period is “capture opportunity.” I thought it was interesting that Goodwin accepted a decrease in profit even as revenue grew because they are preparing for the long term. Other opportunistic moves are Kirkland (and others) focusing more on Funds work now that M&A has basically disappeared and law firm M&A has picked up as firms look for growth opportunities.

And you know that more mergers are afoot when McKinsey steps in and puts together ten principles for successful law firm mergers.

Profitability reports show a mixed bag for the end of 2022, and while Goodwin may stay the course, layoff rumblings continue. (Interestingly, even with the layoffs, overall jobs in the legal industry continue to grow).

Of course, if you aren’t getting what you need out of your associates, you could always sue them. This would seem to be another part of the generational culture clash. It isn’t just non-performing associates but also the continued push (and pull) of a return to the office.

This month a few articles on AI started to pop up. With Chat GPT making headlines daily since November, it was only a matter of time before it appeared in law. AI is developing so fast that firms will struggle to keep up.

Hottest Geographies at the moment:

This hasn’t changed much in the last year, and I don’t expect it to change much this year:

  • Warmer Climates
  • Lower Cost-of-Living Climates
  • Secondary Markets
  • Florida
  • Charlotte
  • Raleigh
  • New York
  • Washington, D.C.
  • Texas
  • California
  • Seattle
  • West Coast

Hottest Practice Areas

Practice areas shift more frequently than geographies, and we review them monthly. We do expect the first half of 2023, at least, to be framed chiefly by economic uncertainty. This is having a significant impact on Corporate, M&A, and Capital Markets. Litigation was softening but appears to be strengthening again. Regulation and ESG seem to be the bright shining star at the moment.

Corporate / Mergers and Acquisitions/ Opportunities shifting to mid-market firms, they are looking to grow with those leaving other firms “find me somebody who got fired,” as some of the larger firms, such as Kirkland and Gunderson, lay off lawyers. Economic activity/recession.
Capital MarketsCapital Markets is down all over. If you can, you may want to think about retooling into finance; even better would be debt finance as bankruptcy gets busier.
Funds Lawyers and FinanceDemand for funds lawyers are up all over; if you can retool as a funds lawyer, this is an area that is seeing sustained demand.

Finance is a little less clear: it seems that finance is holding steady.
EnergyWhile many corporate practices have been down for 2022, the energy market continues to be strong, with many deals proceeding. If you focus on a down market and are looking for opportunities, retooling for energy may be a good move.

This seems to be at least partly driven by the Inflation Reduction Act money.
The long-term impact of the Inflation Reduction Act.
Past expectations around recession are not materializing quite as we expected.

M&A Lawyers may want to retool and rebrand for restructuring deals and workouts – this is similar to M&A.

As of December 2022: Bankruptcy in crypto-currency is a strong place to be.
Will there be a recession?
Labor and EmploymentYears ago, this was a slow and steady practice, but it heated up with the COVID shutdown. It remains hot, with employees not wanting to return to offices, layoffs with companies experiencing the recession, and general uncertainty in the labor market. The impact of the recession on the labor market.
Expecting to see an uptick in litigation because it is a counter-cyclical practice. As deals go bad, we’d expect people to sue over these deals rather than move to the next one.

We are starting to see some improvement and greater demand for litigation.

Also, many court closures created a backlog of cases, and as courts catch up, this has created demand for more litigators.
If clients experience a recession, they may not want to pursue expensive litigation. The impact of a recession, therefore, is an uncertainty.
Commercial Real EstateReal Estate is off everywhere at the moment because borrowing money is expensive, and the direction of interest rates is unclear.

Sit back, build your book of business, and be ready for the next wave.

Real Estate is not down in Florida… one of the few exceptions to the rule.
The future of interest rates.
Environmental Social And Governance (ESG) and RegulatoryRegulatory practices are strong across the board – if you feel that your practice is threatened, look for an opportunity to retool as ESG.

Here is an article on the topic, Why Financial Regulation Is Big Law’s Newest Battleground
Political impact on ESG programs and future.
Intellectual PropertyBio-Tech was up at the beginning of the pandemic, and it continues to be sought after. There is a lot happening in electrical engineering, computer science, and pharma/biotech seem to be the busiest areas right now.

Patent litigation has been very busy.
Some suggestions that firms are reducing IP staff – but patents still seem very strong. (December)
Privacy and Cyber LawCyber attacks continue to grow and reveal privacy issues. This looks like an area for growth if it is an area you are interested in pursuing.

These are things you can still learn; take a CLE course, read this post on retooling.
HealthcareContinues to be very active and sources tell us that this is an opportunity for the future.

If your corporate practice is down, consider a CLE in Healthcare.
Cannabis Everybody says that there is an opportunity in the Cannabis market, but we aren’t seeing it so strongly.