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As the effects of the coronavirus outbreak hit the legal economy and legal jobs in the United States, the damage seems likely to be much extensive and longer-lasting than seemed possible a month ago.
According to experts, the odds of slipping into a recession are increasingly likely as the pandemic puts dire stress on the U.S economy.
“It’s really hard to predict how it’s going to play out,” said Wayne Outten, founder, and chair of Outten & Golden, an employment law firm in New York, of the coronavirus fallout. “The ripple effect can be dramatic in so many different industries.”
Harrison Barnes, the founder of BCG Attorney Search and a legal recruiter, predicts a different kind of legal job market recession-one that will be meaner, longer and more devastating than anything seen before. ‘The coronavirus recession is going to destroy countless legal careers and prevent tens of thousands of them from ever starting. ‘says Barnes.‘ The last three recessions the legal job market experienced were extremely mild compared to what we have here. ‘
Barnes lists the vulnerable legal fields, as well as shares his expert opinion on what should attorneys and law students do in times like this.
What do you need to know about COVID-19 and the legal market?
1. Bondholders, private lenders, and others are vulnerable to market corrections more than before
Loans will dry up, and with this, a large swath of companies and their legal work will go away as well. Consumers and businesses will stop paying loans, creating a ripple effect of defaults through the economy. While the 2008 financial crisis mainly affected banks and the finance industry, this recession will be far different because it will affect a vast number of companies that have never seen anything like this before, said Barnes.
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2. The hospitality industry is facing Potentially Devastating Coronavirus Impact
With the coronavirus pandemic spreading like a wildfire across the United States, the situation for restaurants, bars, and other fields may soon become dire. Barnes expects that this might influence attorneys working in the field. These employers are laying people off in droves, and these employers hire attorneys. Without revenue coming in to pay attorneys, they will stop the legal work. Many of these companies will go out of business–this will have devastating consequences.
3. The manufacturing sector will be affected
Manufacturers also hire attorneys, and they will cut back their legal work significantly. Manufacturing is a massive share of the economy and the hit to this sector is likely to be very bad for law firms reliant on work from these companies.
4. Companies that have already hired law firms for ongoing legal work will stop paying them to conserve cash.
Law firms will watch their collections slow down aggressively, and this will affect their cash flow. Not only will the money and revenue coming in a slow down, so too will the payment for past work that has already been done. Law firms will see this slowdown, become extremely nervous and start cutting people.
5. Junior associates and partners without business and associates and without sufficient training to be profitable will be the first to go.
Attorneys who are an investment for the law firm, or who law firms do not necessarily need, will be let go —and those that are junior who have been hired will have their offers rescinded in high numbers. ‘If I were a junior associate, I would look for jobs in government, or smaller markets immediately. If I were a law student, I would do the same. If I were a partner without business or a senior attorney without business, I would ingratiate myself with attorneys in my firm with business, or look for places that have the work to support me.’ said Barnes.
6. Courts, offices, and other places where litigation work gets done will close and slow down, and this will cause profound damage to the litigation practice area.
‘Litigation was quite safe in late 2000, 2001, and 2008 and 2009 recessions. It is in for a massive shakeout. If I were a litigator, I would look for partners in my own firm with a lot of business and work, or find law firms with a lot of work. I would start monitoring the legal job market immediately if I was worried about work slowing down.’
7. Corporate-related work may come to a virtual standstill from a job market perspective.
When the economy slows down, deals stop getting done because asset prices are depressed, and companies believe that doing deals is too risky. ‘If I were a corporate attorney without business, I would get close to the partners I with work. I would start looking for firms with work. If I were a partner, I would get close to my clients that are least affected by the coronavirus and try to get work from them. I would also start looking for in-house jobs at companies unaffected by the coronavirus.’
8. Areas that have previously been active for attorneys such as technology transactions and data privacy will slow down significantly.
‘If I were an attorney in these practice areas, I would do whatever I could to hold on to my job, clients, and get close to attorneys with work. ‘
9. Trademark law, patent prosecution, and other forms of intellectual property work are likely to slow dramatically.
‘Some firms will continue to have work and have stable client bases that will be unaffected; however, this is likely to be less true in the patent field. If I were an intellectual property attorney worried about work slowing, I would start looking and do a national search. There are pockets of activity all over.’
10. The best practice areas will be employment, healthcare, bankruptcy, and insurance coverage law.
‘Attorneys in any of these practice areas will be able to quickly move firms and move to better ones if they choose. If work is slow at your firm, or you want to increase your salary, you can move to a new firm.’
11. Niche practice areas such as FDA law, antitrust, and project finance will not experience a downturn.
Attorneys in these practice areas should be able to move – regardless of their seniority level in many cases.
12. Partners with business will be in massive demand.
‘If I were an attorney practicing and did not have any business, I would do everything I possibly could to ingratiate myself with attorneys with work and become 100% indispensable to them. Your survival depends on it. If I were a busy partner with business, I would be prepared for changes to my compensation to pay my law firm’s overhead and unproductive attorneys. You will be able to find a more stable firm financially if you want to move. ‘
13. The most significant legal markets with the highest salaries and the largest law firms will be the hardest hit.
‘If I were an attorney in a major legal market with a high salary, I would start trying to speak with law firms in smaller markets immediately. I would leave my options open.’
14. Washington, D.C., be the least affected by the recession.
‘If I were an attorney in a major legal market, or a young attorney getting out of school, I would do whatever I could to get a job in Washington, D.C. This is likely to be the safest legal market.’
15. Smaller to mid-sized markets are safer than the larger legal markets
‘If I were an attorney in a major legal market vulnerable to the recession, I would try and relocate home (if I was from a smaller legal market originally), or get a position in a suburban market or smaller market where salaries are lower, but work is more stable.’ Barnes advises.
16. The government is likely to be stable during this recession
According to Barnes, the government is one of the few places that is likely to remain stable during the Coronavirus recession. The government will pump money into the economy, and there will be hiring attorneys at the state, local, and federal levels. ‘If I were a young attorney, I would do my best to get a government job right now in addition to searching for jobs in smaller markets. If I were practicing, I would start looking for positions in the government as well.’ says Barnes
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