The Good News Keeps Rolling In for the Legal Market (At Least for Now)

On the heels of last week’s mildly positive report of an uptick in legal employment comes more good and reinforcing news.  On Tuesday, The New York Times reported the recent substantial increase in initial public offerings.  In addition, because IPO prices have been somewhat disappointing, companies are often pursuing a parallel track, preparing both for an IPO and for a negotiated sale of the company.  On Monday, The Financial Times reported third quarter projections of a substantial increase in lending by consumer finance companies.  Finally, today The Financial Times reported both that weekly corporate bond issues are among the year’s highest and that high-yield issues are on pace to break an historical annual record.

Cash changing hands is always good for the transactional and corporate legal market.  It’s a good rule that whenever significant amounts of money are involved, there’s a lot of legal work to be done.  Of all the reports, the best short-term news for transactional lawyers is the dual tracking of initial public offerings and negotiated merger and acquisition transactions.  For law firms, that almost doubles the number of lawyers occupied with the transactions, since different lawyers will generally be needed to staff the IPO team and the M&A team.

It’s not obvious that all of this activity is good for the economy as a whole, of course.  The high-yield boom is especially fraught.  It’s likely a result of investors looking for higher returns—but in doing that, they’re also taking a good deal more risk.  And it’s a little surprising in view of the high cost and number of corporate bond defaults in the last few years. It should be clear that chasing higher returns can backfire severely.  That would have long-term repercussions for the economy as a whole and, therefore, for the legal employment market as well.  In the short term, however, the news is good for transactional lawyer work—and that portends well for lawyer productivity and, potentially, employment of additional lawyers.

~ by Kyle Pasewark at Advise-in Solutions on September 10, 2010.

One Response to “The Good News Keeps Rolling In for the Legal Market (At Least for Now)”

  1. […] Should Report Rise on Heels of Most Recent M&A, IPO Data A few weeks ago, I talked about some positive indicators for the corporate legal market—an increase in initial public offerings, corporate bond issues and consumer finance […]

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