Another Positive Sign Raising Hopes for Improvement in the Legal Employment Market

Last week, I analyzed some recent economic and legal market data.  The data did not have deep roots in terms of time, and my conclusion was tentative.  It was also hopeful, since these data, collectively, were the first data group in the last several years that were all positive, and that’s a good sign.

Yesterday, The Financial Times reported a year-over-year increase of 16% in global mergers and acquisitions activity, and (included in those figures) a 76% increase in global buyout activity.  As significant, and partly accounting for those results, was a 58% leverage ratio in deals whose aggregate value exceeded $1 billion (for comparative purposes, leverage in 2007, the last year of the boom, was 67.6%).  The leverage number is particularly important for buyout deals.  On the strategic side, William Vereker, co-head of Nomura’s global investment banking operation, concluded that, partly because corporate earnings will be under pressure in 2011, M&A activity is likely to increase since it will be one remaining way to drive corporate growth.

The M&A market is a significant chunk of law firm corporate activity, producing work not only for M&A lawyers but also for finance, securities, tax and other specialist lawyers.  An increase in M&A activity is thus good news for the legal market in general, especially since large law firms that do most M&A work drive much of the rest of the legal employment market.

This signal, too, is fragile (remember the booming M&A market coming to a screeching halt in 2007).  For those trying to find work in the U.S. legal market, or considering U.S. law schools, the fact that 2010 M&A growth was led by emerging market growth is something of a caution as well.  And of course, the legal employment market depends in large part on the health of the rest of the economy, and today’s Financial Times reports slower than expected growth in the third quarter in the U.S. (though it was growth nonetheless).

Still, the growth in M&A activity one more sign to put in the “going in the right direction” column.  And when trends coalesce, they’re worth watching closely—and in this case, if the trends continue, having a little optimism about as we celebrate the holidays.

~ by Kyle Pasewark at Advise-in Solutions on December 23, 2010.

3 Responses to “Another Positive Sign Raising Hopes for Improvement in the Legal Employment Market”

  1. Self Improvement Tips – How to Develop Your Life for the Benefit Of All…

    I found your entry interesting thus I’ve added a Trackback to it on my weblog :)…

  2. […] loss of 1,000 legal jobs in December.  On the heels of much better news that greeted readers in December and January, that’s too bad.  Even though December’s loss was comparatively large, I […]

  3. […] drive a great deal of law firm business, are loosening.  In another post in December, I noted the increase in M&A activity in 2010 and AmLaw recently reiterated that news.  Today’s Financial Times gives reason to believe that […]

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