Early last year I was talking with a friend who ran the derivatives trading desk for a major U.S. broker-dealer. He was fascinated to hear that one of the top law firms in the country was aggressively hiring for their bankruptcy and restructuring practice group.
Traders look to leading economic indicators when accessing risk and developing trading strategies because they help predict where the economy is heading. Law firm hiring is considered a lagging indicator because it’s typically a reaction to how the economy is currently doing or perceived to be doing. In this case, the firm in question, an exceptionally successful and profitable enterprise, was way ahead of the curve.
Economic Life Cycle of Law Firm Hiring
Roughly speaking, the economic lifecycle of law firm hiring is Transactional, Litigation, Bankruptcy/Restructuring, repeat. With many economists pointing to signs of a recession mid-2020, the economic lifecycle would point to a growth in litigation, followed by restructuring and bankruptcy.
A new report by Law360 reveals that large corporations have increased their outside counsel litigation spending by 20% over the last four years, and those same clients predict they will spend an additional $1.3 billion on outside counsel for litigation in 2020.