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Revealed: The practice areas most (and least) impacted by coronavirus

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Lockdown has hit certain specialisms hardest — but there are reasons for optimism, writes LexisNexis marketing chief Christopher O’Connor

With the news released by the Office for National Statistics on 12 June that gross domestic product (GDP) fell 20.4% in April (the highest decline on record and 10 times higher than the worst month of the 2008 recession), the real impact of COVID-19 is becoming clear.

Yet the effect of this economic shock on the legal market isn’t as straightforward as it might seem. Although many areas of the law are likely to be affected, some are counter-cyclical — when the economy is struggling, they tend to see more work.

Identifying these counter-cyclical areas and assessing the overall impact on demand for legal services is a crucial first step for lawyers and firms to plot a path to recovery. That is why my team at LexisNexis has launched the Gross Legal Product (GLP) Index. Like GDP, this tracks a representative basket of metrics that signify underlying demand for legal work. You can download the full report here.

The legal market contracted 2.5% in the first quarter of 2020, but there are pockets of growth. For the three months to March 2020, our model found a 2.5% decline in legal work. This may not sound high (particularly compared to GDP figures!) but it reverses almost half of the 5.1% growth since 2017 in a single quarter.

Lockdown has hit certain areas hardest. Property legal activity is down 25%, driven by the shutdown of the residential market (where sales are down 70%) and a distressed commercial real estate sector. Immigration has been equally affected — previously fast growing it has suffered from the suspension of global travel (international passenger numbers have fallen 99%).

But there are reasons for optimism. Employment law is booming, as firms figure out the legal ramifications of placing 7.5 million workers on furlough and prepare for the likely coming wave of redundancies. Commercial lawyers (in private practice and in house counsel) are on the frontline of managing the legal response to COVID-19 and this is reflected in our model, which shows demand has grown 8% in just three months. The purest counter-cyclical area of practice is restructuring and insolvency — economic turmoil always means more work for the administrators.

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Although large firms are best placed financially to weather the crisis, smaller firms and, particularly, corporate lawyers are more likely to see demand increase. The top 100 firms have more exposure to areas of the law likely to contract (43%) than any other section of the market. In-house legal work is more likely to grow than shrink — more than 80% of their work will be stable or will increase over the next few months as the crisis continues.

What does this mean for law students? You have already had to adapt to online exams and some of you will be expecting to spend the majority of the next academic year learning from home. But you now have another challenge — finding a job in the worst recession on record. Although I can’t offer much comfort, our practice area analysis may help you plan your applications. Areas of expansion (employment, commercial, tax) or stability (competition, compliance, family) are more likely to be hiring. If your heart had been set on a career in one of the areas worst hit by COVID-19 (immigration, property, crime) then you may find a tougher recruitment market as those firms look to cut costs.

For aspiring barristers, depending on your intended specialism (commercial disputes are likely to increase), we forecast that litigation will take some time to recover, so you may want to consider building experience in another area of the law while waiting for the bar to recover.

Christopher O’Connor is head of segment and product marketing at LexisNexis.

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38 Comments

sussex gal

The work will definitely be there in some areas, but will there be the same ability to actually pay?

Anon

What? Firms check the clients ability to pay prior to completing the work.

sussex gal

Yes yr right.

That’s why no firm in history, has ever had to make provision for bad debt.

Gotcha

Anon

Thank you but I know how working capital and WIP works – this is accounted for in firm’s budgeting and forecasting.

Ron

So you will know that budgeting and forecasting will need to be adjusted, in a fairly significant way at least initially to be cautious given the unknowns at play, to account for anticipated increased levels of bad debt.

Realist

Firms have changed their policies in anticipation of potential issues. For example, requiring that bills be paid immediately rather than within 28 days, and requiring that the retainer is replenished immediately once drawn upon, and that (professional obligations notwithstanding) if the money runs out, we down tools.

Student

Unrelated to Covid but what is annual pay like at US firms in advisory areas e.g. Employment, Competition etc. Is it in line with transactional lawyers at NQ and beyond?

Anon

Base pay is, but as the hours are shorter you’re less likely to get a bonus/as big a bonus

Anon

True, but advisory areas like projects or tax at a firm like V&E or Akin still nets ~£150k base NQ rate, whilst the same practice area at the likes of Pinsents gets you 72,500 base plus I’m guessing a measly 10-15% bonus max if you hit some ridiculous chargeable hour target that you’re unlikely to hit. In any event you’ll work the same hours for 50-65% of the potential income.

Anonymous

Advisory area like Projects eh? Why you’re quite the clever little one, tell us more.

Hamish

Competition lawyers are primarily transactional lawyers, especially at US firms.

Pop I

“ For aspiring barristers, depending on your intended specialism (commercial disputes are likely to increase), we forecast that litigation will take some time to recover”

This makes no sense whatsoever. Commercial disputes are different and separate to litigation?

Anonymous

The whole “survey” is gibberish. It is a marketing exercise, of sorts.

goaway

Commercial litigation isn’t all litigation – it’s conceivable that commercial litigation going up won’t mean an overall decrease in all litigation. I’m not sure that overall litigation and dispute resolution is going to decrease due to the rona, though.

Serengeti

The categories in this survey are too broad “Commercial” is comprised of several different types of lawyers many of whom are not doing well! Same with “Corporate”- there is no M&A so wtf is this person talking about saying that they’re hiring. Same for compliance! This guy should have spoken to recruiters as they would hopefully have told him of the multitude of firms who’ve frozen several live roles since the outbreak, and also to the many candidates applying for roles who’ve had their recruitment processes frozen in the areas he describes as those that are hiring!!

8 Years Call

What I’d say to aspiring barristers (at least those expecting to do work in court) is that I expect next year’s 2nd 6 pupils are going to be ridiculously busy.

There’s now an unprecedented backlog of hearings.
In property work, that backlog is only going to increase as the general stay imposed by PD51Z has been extended until the end of August.
The president of the Family Division said last week that things there aren’t going to be back to normal until maybe Spring of 2021.
I have no clue what’s happening in crime, but I don’t think there’s going to be any return to multi-day crown court trials in the immediate future.
Whilst everyday court work is pretty quiet at the moment, I anticipate that next year it’s going to explode. The cases haven’t gone anywhere, they’ve just been deferred. I expect there will have to be longer sitting days, along with huge numbers of DDJs and Recorders brought in, to help clear the backlog.

Tim

The problem is that the administration of these hearings will have to be vastly improved. I predict a shambolic attempt at cramming everything in.

This will only work if there is some joined-up thinking: you can’t get from court to court if you’re on a blitz list at 7am with 20 other cases…

Porpoise tomato

“For aspiring barristers, depending on your intended specialism (commercial disputes are likely to increase), we forecast that litigation will take some time to recover, so you may want to consider building experience in another area of the law while waiting for the bar to recover.”

This paragraph exemplifies why a “marketing” person at LexisNexis is really not in a position to advise future lawyers about career strategy.

Pop I

Completely agree. If commercial disputes are on the up (which is a large proportion of litigation) why on earth would litigation take time to recover?

I don’t know where to start with the suggestion that someone looking to join the Bar should sit it out and wait for it to recover…the whole of the Bar… and instead go and specialise in a some other unspecified area…as a solicitor??

Just take this drivel down

Marketing person

This post exemplifies why a “law” person at Legal Cheek is really not in a position to advise future marketers about career strategy.

anon

Sorry if this is unrelated but the admins on here have ignored my request to make a career conundrum. I want to practice public international law, what are the best firms I should apply to for a training contract? At the moment I’m thinking debevoise, skadden, latham, freshfields and cooley. Also will firms be disinterested in me unless I want to qualify into a commercial area?

??

HSF and links too. Obviously the boutiques (fietta and Volterra 3 crowns) after qualification at a bigger firm is an option too. They all do great work

Quality research there captain

Fietta and Volterra rofl lmao good one

Not research buddy

I meant Volterra Fietta and Fietta, which are now two separate firms since Fietta (one of the founding partners of VF), left to start his own firm. Apologies for my lack of clarity. Now if you’re instead making fun of the firms, can’t help you there. Both are excellent boutique firms (I don’t work at either)

??? Again

You shouldn’t just be in the mindset that you’re gonna practice PIL just because you did a module in it or an internship. The point of the TC is to discover new fields. Don’t apply to a firm SOLELY for their PIL expertise (although of course it should influence your decision)

Lmaololrofl

Cooley doesn’t do practically any public international law. Go troll someplace else or better, do some research first you gimp.

anon

You should check the legal directories you mug

anon

which all rank cooley for PIL…. absolute idiot

infonews

Lmao good luck with those, ancient outdated paid-for info submitted by law firms. Everyone knows Cooley doesn’t to jack in PIL in the City or elsewhere gimp

ymmv

The busiest area in the market is restructuring, but it is quiet relative to how busy it will become. Litigation, contrary to the marketing man’s witterings, is busy but again courts have been out of action so it will get busier. All of this is not just short-term, this is mid to long-term.

Whilst loan markets dead, high-yield will be busy. Some structured finance dead, some will tick along.

M&A is dead, but investment longer term infrastructure projects will probably be busy/busier in the following months. Funds directionally follows strategic M&A.

There is not going to be a wave of hiring across niche city employment teams. They may be busy, they may not be. It depends on the team, their clients and the work. But there isn’t going to be a hiring spree.

Qualifying into advisory teams is niche and statistically improbable for the majority. Tax is also not going on a hiring spree. They may or may not be busier but that means individuals get a little more stretched.

No one can really say what will happen other than things are not good at all, and that there will be an uptick in RS and litigation.

City

I’m far more interested in the outlook for Pensions, the lifeblood of any city firm.

DB/DC

It’ll take more than a little pandemic to bother the Pensions squads.

A lifetime of intense bullying coupled with high scores on the autism scale and a rare possession of actual technical legal ability means these creatures are amongst the most resilient you will find in the profession.

In what is already a relatively bomb proof industry, Pensions lawyers are essentially cockroaches.

Any would-be lawyer would be an utter fool not to study law at Durham and take the Pensions Law elective. In addition to getting a head-start on qualifying into the most prestigious of practice areas, you will also get a head-start on having to co-exist with insufferable public school boys.

Realist

It’s comments (and analysis) like this that I come to Legal Cheek for! 🙂

Infrastructure projects lawyer

Didn’t see a particular downfall in infrastructure work; Middle East market seems to be running as usual.

Project finance associate

Same in large scale renewables, major offshore wind projects north of US$1bn keep closing every other week.

Pls help

I’m a trainee solicitor earning 27k. I’m swamped in work, so much so that my mental health is suffering. I’m doing 14-15 hour days and have been for 2 weeks. I hate it and I’m suffering mentally. I wish rona would actually affect my practice area negatively for a little while.

Concerned partner

Is your supervisor aware of this? Trainees should not have this much responsibility. You are there to TRAIN. I know some partners that don’t work that long…

I highly suggest you move firm, or at least department on qualification. Working that long at your level is playing with fire. Only a matter of time before it causes it one.

David

I see your game. You are being nice to that trainee to get them on side. You are then going to invite them to your penthouse and hope that you get repaid for your efforts. This is 2020. Doesn’t work like that any longer mate. You need to pay your £300/hour to get your thrills.

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