Trump Policies Will Drive Growth in Key Practices
To capitalize on the changing landscape, firms should start strategizing about talent now.
Ross Weil and Keith Fall, The National Law Journal | February 27, 2017
Change in Washington can be good—very good—for law firms, particularly if they bet on the right practices and talent to help their clients navigate new political realities.
As strategic advisers to firms, we have been closely watching developments to determine which areas are most likely to provide growth potential for legal business. And based on our market intelligence, we’ve identified six practices that we think will show significant activity.
Naturally, a turn of events (or tweets) could alter the landscape. But given the administration’s initial moves, we see promising developments for well-positioned firms in these practice areas:
During the campaign, President Donald Trump made it clear he would support coal, oil and natural gas providers. So far, he’s made good on his promises.
In January, he resurrected the controversial Keystone Pipeline and sped up work on another pipeline through the Dakotas. He’s also said he would target Obama-era emissions rules that would have closed hundreds of coal-fired power plants in favor of renewable energy sources. It’s no surprise that deregulation will provide a strong boost to energy and environmental practices as clients attempt to understand the changes.
The impact also is likely to be felt across several other practice areas. For example, if coal regulations loosen, mine acquisitions may heat up — creating work for M&A and finance lawyers. And trade lawyers will be needed to grapple with expected changes in import/export policy affecting energy suppliers.
Mergers & Acquisitions
Some companies may be taking a brief breather from the markets as the administration finds its footing, but in the long run, we expect Trump-led deregulation is likely to spur more deal activity across several industries. (The energy sector, as we said, is ripe for deregulation-driven deals.)
Market volatility, too, may push the Federal Reserve to hold the line on interest rates, which, in turn, will be good news for deal makers. And Trump’s corporate tax cut proposals could free up cash for transactions.
On the deregulation front, Trump has targeted the Dodd-Frank Act for major revisions and has set a May deadline for new Treasury Secretary Steve Mnuchin to examine the law and recommend changes. Any easing of restrictions on bank lending could put more capital in play for a broader array of deals.
President Trump has said that a major announcement on tax reform would be coming in a matter of weeks, and administration officials have said the plan will be the most significant since the Reagan era.
If his campaign platform is any indication, Trump may call for a cut from the current 35 percent rate to 15 percent. Individual tax rates are also on the table, Trump administration officials have said. And Trump has proposed a “repatriation tax holiday” aimed at spurring U.S. companies to bring home cash from overseas accounts.
Corporate tax practices should see an uptick in client interest if the tax plan is enacted. If personal income tax rates are also adjusted, practices serving high-wealth individuals and estates will be active, too. Expect Trump’s efforts to reverberate across practice boundaries. Trade practitioners will need to grapple with the adjustments in import and export rules, and additional cash from tax savings and repatriation may trigger new investments that will keep finance and M&A experts busy.
As a candidate, Trump pledged to make cybersecurity a top priority of his administration. Trump was set to release a new executive order on cybersecurity regulations in January, but scuttled the announcement at the last minute. A draft of the rules, however, leaked to The Washington Post, showing that private businesses are likely to be major players in Trump’s plans.
A Trump focus on cybersecurity will only accelerate business in an area that we believe is ripe for innovative legal work. For firms, data security looks like a multipractice winner. It may provide a litigation growth opportunity in a relatively flat overall market for disputes.
And as corporations look to limit their risk, law firm transactional, intellectual property, privacy and insurance acumen will be needed.
During a post-election speech, Trump recited a litany of public works projects that his administration would tackle. Trump’s plan relies heavily upon private financing. During the campaign, Trump said he would offer $137 billion in federal tax credits to private firms that back transportation projects.
While critics have said a private-financing formula will never pay for all the projects on Trump’s list, any multi-billion-dollar uptick in infrastructure spending is likely to drive revenue for project and public finance practices at firms. The efforts, too, could mean significant work for government contracts-focused practices.
Health care-related practices have been in hyper drive since the Affordable Care Act’s passage six years ago. We expect more of the same — especially with the Trump administration’s pledge to eliminate and replace the ACA.
Merger activity and related antitrust litigation have been exceptionally strong of late, as large players like Cigna, Anthem, Humana and Aetna have attempted consolidation — albeit unsuccessfully. ACA repeal efforts have so far stalled in Congress, as legislators struggle with how (or whether) to construct a replacement. Yet even before the election, bipartisan support had developed for changes in the law. Should the ACA survive, health care regulatory specialists will likely have a full roster of changes to help clients understand and implement.
In general, law firms looking to take advantage of the post-Trump surge in legal work will need to move quickly.
Placing bets now on talent can allow firms to capitalize on the upswing in work expected as the Trump administration matures.
ROSS WEIL AND KEITH FALL are partners with Walker Associates, a New York-based legal search firm that specializes in law firm partner recruitment.