As well as causing severe illness and death for hundreds of thousands of people around the world, COVID-19 has also heavily impacted virtually every sector of the economy.
This article explores what that impact has been on corporate law firms, both here in Ireland and around the world.
Lessons to learn from previous downturns
Although in Ireland we have lived with lockdown measures for over two months, it remains very difficult to calculate how long businesses will have to deal with any restrictions, as well as with the coronavirus itself.
One of the few aspects that is widely agreed upon is that we are heading into a severe recession.
And, as pointed out in a McKinsey report published at the start of May 2020, law firms tend to weather downturns better than the overall economy does.
While the figures above relate to the U.S. market, the position in Ireland is likely to be similar.
Many large international corporate law firms have recently opened offices in Ireland, partly in response to questions around Brexit. From an incoming applicant’s perspective, this may help to offset some of the contraction caused by the coronavirus precipitated recession.
Some firms have introduced pay cuts, but graduate recruitment is set to continue
As the Irish Times reported in early May, some (though not all) Irish corporate law firms were forced to reduce pay for some of their staff.
However, the article also noted that, of the firms who responded to questions, most were continuing their graduate programmes as planned.
It will likely be the case however, that the internship programmes of these firms may be run in a virtual format over the coming months.
Not all departments are likely to fare equally
As with all recessions and recoveries, different sectors of the economy perform differently in response to the changing market.
The collapse of property prices and development caused by the global financial crisis, for example, had a significant negative impact on the revenues of property law departments in most commercial law firms.
Over the next year, we can expect to see a quieter M&A season (as companies will guard their cash rather than spend it on acquiring other companies). Expect to see some corporate M&A transactional lawyers re-branding as corporate restructuring/insolvency lawyers.
As noted in this article in the Irish Times, the last few years has seen a boom in aircraft leasing activity which led to a significant expansion in the aviation groups in large law and accounting firms. Aircraft leasing lawyers might start getting to know their litigation colleagues over the next few years in the event that planes become impounded due to a failure to pay debts, such as in this article from The Telegraph.
While it is always difficult to predict what the next growth area will be, it is not unlikely that the global response to COVID-19 will cause some upward momentum in the pharmaceutical and life science sectors, for example.
Increased emphasis on remote working
As with most professional services firms, corporate law firms have greatly expanded their home-working policies to enable them to comply with government guidelines on social distancing.
And, while the Law Society of Ireland recently published guidelines on how firms could return to onsite working, an increase in the amount of remote working when compared to previous levels is likely to continue.
In part, this is due to a trend that began before the coronavirus restrictions took effect.
As noted in this article from the Financial Times, “before the coronavirus crisis, many law firms had flexible working policies but the organisational culture had not always encouraged it.”
Whereas now, because it has had to be used so extensively because of these measures, it has been proven to work more effectively than many had anticipated.
Outside of law firms, facebook has already recently announced that it plans to roll-out remote working across its entire staff indefinitely. It remains to be seen whether any law firms will follow suit.
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