HEALTHY PRACTICE AREAS IN AN ILL ECONOMY
Legal pundits state that the down-turn in business for law firms could well last into next year, and even beyond. But many of these experts, consumed by gloom-and-doom forecasts, fail to acknowledge an important history lesson: When the economy is bad, certain practice areas reliably become, or remain, hot.
Number one on the list is litigation, which even the most pessimistic fore-casters recognize. As practice areas such as finance, mergers and acquisitions, securities and real estate began to crash and burn last year, most types of litigation grew—and they continue to do so (giving proof to the statement that “When the economy is bad, more people litigate”).
Certain types of litigation are particularly strong, including products liability for the pharmaceutical and medical devices industries, as well as construction. Bad-faith suits are also increasing. Patent litigation continues to grow, too, as more foreign companies seek to protect their positions.
In addition, there is this important point about litigation, which more firms are starting to recognize: It is the practice area where clients are most likely to show interest in alternative fee arrangements. Thus, alert firms could further increase their litigation work by approaching clients to discuss creative pricing alternatives to hourly billing.
What Other Areas Are Strong?
The most obvious in a bad economy is bankruptcy. It always has been and always will be so. Last year filings did not increase dramatically because troubled businesses were trying to reach out-of-court workouts and prepackaged agreements. Now the picture has changed, both in the number of filings and their magnitude. Bankruptcy will be a red hot practice area for the foreseeable future.
Intellectual property has been a hot growth area in recent years owing mainly to patent prosecution and litigation—and these days, in the “age of YouTube,” copyright practice in particular is strong, as user-generated sites flourish and copyright laws struggle to keep up.
Likewise, employment law has been a steady growth area for years, in part as a result of age and sex discrimination suits. The massive layoffs in many industries may continue this trend. However, the real growth will come from the rebirth of labor law as the Obama Administration pursues a pro-union stance in elections and contract negotiations. Of course, the big exception to this may be in the auto industry.
In addition, while federal regulatory practice cooled off slightly during the Bush Administration, firms that have maintained a strong reputation in this field will soon be seeing a great increase in work under the Obama Administration. The same will be true for those firms and lawyers with regulatory practices at the state level.
Add in Environmental, Health Care and Estates
Although some experts are predicting negative growth in environmental practice, that hardly makes sense. Global warming and sustainability concerns continue to be major issues not just in the United States, but also in many other parts of the world. As a result, more and more firms are expanding and diversifying their environmental practice groups, both to acquire existing work and to prepare for what’s to come.
Health care is another area that has been steadily growing, even in smaller firms. And since it looks like there may be some major changes coming in health insurance, that growth should continue. Also, the economic situation is already producing more growth in estate planning, which may soon become a hot area as changes are almost definitely coming in the tax laws. These factors, along with the anticipated changes in health-care coverage, will also produce more growth in elder law practices.
And on a final note: While transactional work is almost ice cold, corporate lawyers who have provided business counsel to their clients, in addition to legal counsel, are recognizing many opportunities for more work as they advise their clients on how to survive this economy.
In many firms, the growth picture in the foregoing practice areas may not completely offset the decline in other areas. But for the firms and lawyers that have strategically focused their practices on a limited number of the right areas, the outlook is not bleak at all. In fact, it could be promising. The key is to remember the history lesson and recognize which areas are strong even when the economy is not. As my father used to say, “It’s an ill wind that blows no good.”
About the Author
Bob Denney, President of Robert Denney Associates, Inc., has been providing management and strategic planning counsel to law firms for more than 30 years (including through three recessions). He can be reached at (610) 964-1938.