The reopening of the federal government is likely to produce a reprieve for private-sector lawyers whose practices were affected as federal agencies slowed or halted work during the partial shutdown.
Law firms potentially at risk for lower first-quarter earnings were those with large practices that dealt with agencies hobbled by the shutdown, including the Securities and Exchange Commission (SEC), Internal Revenue Service, Federal Trade Commission and Environmental Protection Agency.
Before the temporary deal made Friday to end the shutdown, many lawyers worried about the effect of the closure. “Yes, it certainly could put a crimp in our business,” Gregory Sichenzia, co-founder of the New York law firm Sichenzia Ross Ference, told the American Law Journal during the shutdown. “It’s not devastating to our business, but we’re certainly in uncharted waters.”
One area that faced a potential slowdown was the legal work associated with filing initial public offerings (IPOs). Out of the SEC’s 4,400 employees, fewer than 300 has been working. Without the SEC to offer guidance to firms seeking to go public, IPOs could have been delayed.
“In prior government shutdowns, the SEC had some access to emergency funding of its own,” David Zaring, a Wharton professor of legal studies and business ethics, said on a recent Wharton School radio show. Zaring pointed out the SEC did not have access to the emergency funding during the most recent shutdown.
Throughout the shutdown, federal courts managed to remain operational by using court-fee balances and other funds and reducing expenditures. Some civil cases in which the government is a party had been suspended or postponed, while criminal cases were proceeding.
- ABA Journal story on Trump announcement
- ABA offers free CLEs to affected lawyers
- ABA Journal story on shutdown’s effect on law firms
- Jan. 16 statement by the Administrative Office of the U.S. Courts