Trump’s win brings new opportunities, challenges for US law firms
By David Thomas and Sara Merken
Nov 6 (Reuters) -A change in presidential administrations always means change for leading U.S. law firms, whose corporate clients need advice on shifting regulations and navigating new policy and business landscapes.
Tuesday's election brought a clear victory for Republican Donald Trump, a GOP majority in the U.S. Senate and possibly the House of Representatives, and a conviction among Trump's allies that his vision for transforming the economy won a strong mandate.
Trump's win is likely to jolt some legal practices more than others, including regulatory work in areas like energy and the environment, and for attorneys who help clients structure mergers and investment deals and manage antitrust, employment and tax enforcement.
"Change generally is good for lawyers," said law firm consultant Peter Zeughauser. "That's going to be particularly true in the regulatory practices," he said, as the promise of aggressive deregulation brings both uncertainty and the chance of new economic activity.
REGULATORY AND COMPLIANCE
Trump has said he would broadly roll back regulations he sees as strangling U.S. business. But cutting red tape doesn't necessarily mean less regulatory work for law firms, said Dan Binstock, a partner at Washington-based legal recruiting firm Garrison. Rapid, potentially chaotic change typically increases demand for legal advice.
"Whenever there's uncertainty, the work spikes," Binstock said.
Some states may seek to fill a void left by pared-back federal regulation. Democratic state attorneys general frequently sued to stop Trump's policies during his first administration, just as their Republican counterparts have targeted policies of Democratic President Joe Biden.
Law firms, including Akin Gump Strauss Hauer & Feld, Hogan Lovells, Holland & Knight, and Wilmer Cutler Pickering Hale and Dorr, responded by hiring former state government lawyers and creating practices dedicated to state enforcement matters.
ENERGY AND ENVIRONMENT
Trump has vowed to make it easier for energy companies to drill on federal land and build new pipelines, and law firms with strong traditional energy practices could benefit under his second administration. The United States, already the world's largest oil and gas producer, could further expand production if Trump dismantles Biden's climate initiatives.
Experts told Reuters they think Trump’s win is unlikely to dramatically slow the current push for renewable energy thanks to the Inflation Reduction Act enacted under Biden. Law firms responded to the IRA’s passage by hiring energy and infrastructure-focused lawyers to advise on taking advantage of the law’s tax credits and other provisions.
Although Trump has criticized the law, it would take Congress to repeal it. That would be unlikely given the clean energy investments the IRA has generated in Republican states.
The first Trump administration led to a drop in federal environmental enforcement, but an uptick in state enforcement and a robust pipeline of private environmental lawsuits, corporate environmental lawyers have said.
Several major law firms, such as Kirkland & Ellis, DLA Piper and Covington & Burling, created environmental, social and governance (ESG) practices in recent years, focused on new reporting requirements and investor activism on issues such as climate change and employee and management diversity.
Trump and his Republican allies are likely to energize an existing backlash against the ESG movement that could bring new work to such firms.
MERGERS AND ACQUISITIONS
Bankers, lawyers and consultants said in interviews with Reuters that M&A activity, which reached a record high in 2021, could slow under a Trump administration due to policy uncertainty, trade wars, protectionism and inflationary pressures.
But investment bankers and deal lawyers also said Trump's agenda would ease constraints they faced under Biden, whose administration adopted a tough stance on antitrust policy and challenged several significant transactions.
Clients may take advantage of looser merger enforcement to push forward with large-cap company deals, said Zeughauser, noting that M&A work reverberates through many law firm practices including regulatory, employment, litigation, private equity and real estate.
ANTITRUST
Trump is expected to dial back some Biden-era antitrust priorities and potentially abandon a bid to break up Alphabet's Google over its online search dominance, experts told Reuters. He will likely press other cases targeting Big Tech, however, and few expect drastically curtailed antitrust enforcement.
Trump is also likely to pull back on some policies that irritated dealmakers under the Biden administration and Federal Trade Commission Chair Lina Khan, attorneys said, including a reluctance to settle with merging companies facing enforcement actions by the FTC or the Department of Justice.
Binstock said antitrust work at law firms could increase if Trump’s policies spark more dealmaking, but the impact could be tempered by laxer enforcement.
EMPLOYMENT AND IMMIGRATION
Trump made cracking down on illegal immigration a campaign centerpiece and called for reforming aspects of legal immigration. The latter could spur work for lawyers who help corporate clients manage cross-border deals, overseas employees and foreign-born U.S. workers.
Trump is expected to undo rule changes by the National Labor Relations Board under Biden and replace key NLRB personnel, giving employers a greater advantage in labor matters, employment law firm Fisher Phillips noted on its website Wednesday.
INTERNATIONAL TRADE
International trade practices can expect to be busy if Trump achieves some of his promised initiatives, said Rachel Nonaka, a partner at legal recruiting firm Macrae.
Trump has proposed 10% or higher tariffs on all U.S. imports, a move he says would eliminate the trade deficit. Critics say it would lead to higher U.S. prices and global economic instability.
Major U.S. law firms have already adjusted their approach to a key trade rival, China. A growing number have shuttered offices in China, amid growing pressures on foreign businesses, economic uncertainties and geopolitical tensions.
Beyond specific practice areas, large law firms can expect to maintain healthy financial performances after a strong 2024, law firm strategist Kristin Stark of Fairfax Associates said in an email.
"Thus far, we do not see a change in the administration/White House impacting that trajectory, and fortunately, we have likely averted disruption that would have come from a contested election," Stark said.
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