What Goes Up, Usually Comes Down: Law Firm Profits Could Nosedive in 2022

 

"Law Firm Profits May 'Plunge' This Year Amid M&A Slowdown and Expense Growth"- Law.com, May 9, 2022

Reuters reports that during Q1 2022, global M&A activity nosedived 29%. It cites war in Europe as a major reason for the decline.

As many know, the drying up of easy money is also a driver. In addition there is ramped-up regulatory scrutiny about antitrust issues.

As for direct expenses, Law.com documents that during Q1 2022 they have surged 13%. A piece of that is associate compensation, including both bonuses and salary.

If profits do plunge at particular firms, the pressure is on law firm leadership to maintain PPP. Otherwise there could be partner flight. 

The solution could be associate layoffs, both the stealth kind and formal reductions-in-force. Their high compensation makes them sitting ducks for terminations. In general, associates have not lived through a down market. If one develops and catches fire, they could experience a new kind of challenge to their careers.

Connect with Editor-in-Chief Jane Genova at janeGenova374@gmail.com.

 

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