It’s tough to make predictions, especially about the future. ― Yogi Berra
The most accurate part of making predictions is how people can always be counted on to make predictions. People predict the weather, the outcome of stories and, right now, the presidential election—often with heated passion.
Predicting future legal markets may seem like it invokes less emotion than predicting the 2016 election. Not true. My discussions with law firm leaders, partners and corporate counsel suggest these closeted futurists have many predictions—passionate predictions—about what to expect. As tough as predictions are to make, everyone exercises their right to make them.
The BTI Consulting Group combines its own research, based on in-depth interviews with 300 or more corporate counsel in each of the last 15 years, with key trends to see where the legal market is headed.
In addition to growth in the established areas of law covered below, we see these new areas of law emerging and likely to grow within three to five years:
Diagnostic labs and life sciences companies are betting big on personalized medicine. Some companies plan to offer custom drugs designed for an individual’s DNA. The companies and their investors are looking for strategies to protect and use the drugs and processes when a core component of the drug (a patient’s DNA) is not their property. In addition, these same companies are thinking about litigation arising from unintended and unexpected outcomes.
Food companies already spend triple the amount a typical company spends on litigation. The food industry sits at the epicenter of GMOs, an extended and complex supply chain, and more performance- and health-based ingredients. Food companies expect challenges and claims from new ingredients and use of GMOs.
Food companies expect a continued increase in mergers, joint ventures, licensing and patent protection as the food chain continues to reinvent ingredients and offerings.
Genetically Modified Organisms
Expect a broad range of litigation to develop—especially along the lines of class actions and mass torts—for unintended, unforeseen consequences. Corporate counsel also expect IP litigation, including patent infringement, to crop up. The demand for regulatory analysis, lobbying and counsel will grow substantially.
The growth will be driven by biotech, life sciences, pharmaceuticals and chemicals. Look for substantial growth in agriculture and throughout the food industry supply chain.
Clients are looking for globally coordinated regulatory strategies and compliance efforts. This area of law includes regulatory advice and counsel, lobbying and government relations. Clients want one central source against which they can monitor their business, product development and compliance. Like other emerging service areas, success will require deep understanding of clients’ business.
Our client-centric crystal ball shows the most growth for 2016 in the following established key practices:
Growth of global supply chains, regulations and increased product complexity is increasing the size and scope of product liability. The global supply chain has companies making use of components on a much larger scale than ever before. This means when a component fails, it is failing in a larger number of products and in more places around the globe. The growing supply chain also places product dependency on more third‑party‑supplied components, creating more points of liability.
In addition to supply chains, most products—ranging from cars to phones to medical devices—are becoming more complex. Products can have more functionality but can fail more often with bigger consequences for those relying on the products.
Clients and plaintiff’s attorneys are both equally convinced that recent court decisions drive them to spend more money in the earlier phases of class actions than in years past. The front-end loading of spending, a more creative plaintiff’s bar and client willingness to defend are driving the class action market’s growth.
In addition, class actions are increasing in high-risk areas such as securities, accounting irregularities, chemical exposure and regulatory violations.
Mergers & acquisitions of mid-sized companies—between $15 million and $700 million in revenue—will continue to show strength.
Foreign companies with large businesses in the United States are buying smaller companies to accelerate market growth and market development. The foreign companies are looking to purchase technology, distribution channels, product development skills, product lines and extensions.
Large US technology-based companies are also active buyers of smaller companies and look to these acquisitions for technology development and product line additions and extensions.
Large companies are finding the global economy an increasingly difficult environment to drive organic growth. Growth not only drives market share but drives stock price. Large companies will continue to combine to create enterprise value, meet strategic market needs and drive up share price. The large-scale global M&A arena is in its early stages of development.
Cybersecurity is growing at three times the rate of other legal services. Corporations have an unrelenting appetite for counseling, compliance and representation in litigation and government investigations when there is a breach. The counseling for prevention and compliance is especially valuable.
Increasing regulatory enforcement combined with increasing business complexity and size of exposures is driving a marked increase in bet-the-company matters. Companies see more enterprise-level risk in M&A, accounting irregularities, changing regulatory interpretations, antitrust and activist investors. Bet‑the-company litigation is especially prevalent in banking, financial services, health care and telecom.
FCPA and Bribery Act
As companies continue to move into a more global mindset, they find once-legal practices are legal no more. Global business is often conducted through agents, brokers and consultants. These third parties operate under local law. Yet these local business practices may have exposed the companies they represent. Governments are interpreting the FCPA and the Bribery Act more aggressively as they look for signs of violations, even though these business practices may be legal in local jurisdictions. These are expensive to defend and can hurt stock price and supply chain—driving growth especially for US- and UK-based law firms.
New and Growing Opportunities for Getting Hired
The hiring process in these new and growing practices will be different from the past. Each of these new practices poses large-scale legal and business risk. Corporate counsel are under mounting pressure to define the business risk along with the legal. This pressure to define business risk is driving corporate counsel to first look for attorneys who understand the nature of the business. Then and only then, will these corporate counsel consider other factors.
The law firms that can demonstrate deep business understanding will have first access to these growing practices. The winning law firms also will have a penchant for mapping out new areas of law and legislation. But in the end, the new practices are becoming more complex and pose more risk. This is good news for law firms’ economics—and good news for law firms who talk to their clients on a regular and systematic basis, as these firms are best positioned for the new business.
About the Author
Michael B. Rynowecer is the president of The BTI Consulting Group. He blogs at The Mad Clientist.
(Feature Image Credit: ShutterStock)