If Your Job Depends on Dealmaking ...

 Law firms are nervous about global and US dealmaking. The intersection of myriad forces, ranging from the end of easy money to the majority of progressives in the Federal Trade Commission, could end the most recent boom. However, there had been an uptick in May 2022. Here Quick24News reports on Law and More' coverage of that development in May.

What we think of as the more general boom in M&A had been kicked off by US business leader Jack Welch. At least that's the assessment of journalist David Gelles in the negative biography of that former head of GE - The Man Who Broke Capitalism."

"The Man" ranks high on Amazon: 1,118. During the time Welch had been chief executive officer, documents Gelles, GE made almost 1,000 acquisitions, spending $130 billion in the process. The author is not bullish on the corporate and social impacts of such dealmaking. Neither are business experts currently.

Since Welch became the model of the smart business leader, his dealmaking generated solid niche practices - both transactional and litigation - for large law firms. Corporate chief executive officers felt almost compelled to get into the M&A game. Also, growing a business internally versus buying one became perceived as too time consuming. Business had entered fast time.

However, that frenzied dealmaking which produced so many unrelated non-synergistic businesses for GE did not produce a sustainable model. Welch had been vilified as the stock sunk. His legacy remains tarnished.

Recently, GE shrunk what Welch had created into three businesses - energy, healthcare, and aviation. It structured that into three public companies. Paul Weiss had been the primary legal counsel on that process.

The Top Corporate M&A Law Firms, according to DealRoom

• Cravath, Swaine, & Moore LLP
• Davis Polk & Wardwell LLP
• Kirkland & Ellis LLP
• Latham & Watkins LLP
• Paul, Weiss, Rifkind, Wharton, & Garrison LLP
• Simpson, Thatcher & Bartlett LLP
• Skadden, Arps, Slate, Meagher & Flom LLP
• Cleary Gottlieb Steen & Hamilton
• Debevoise & Plimpton LLP
• Shearman & Sterling LLP

The future for the business of law firms playing in the M&A sandbox remains uncertain. The increase globally and in the US of dealmaking in May might not be sustainable as fears of a global and US economic slowdown intensify and interest rates rise. 

In mid-May this year Law.com noted there could be a "plunge" in law firm profits because of the twin developments of dealmaking pulling back from overall 2021 highs and rising expenses.

Much of that expense increase has been associated with compensation. Therefore, jobs of associates could be at risk.

Already Steptoe and Johnson has instituted salary haircuts for associates who don't make the billable numbers. There is chatter that other law firms could adopt that model.

On Subreddit Big Law there are posts about negative signs on the associate front. For instance, lateral hiring among associates seems to be cooling. At one law firm summers complain about the oddball mandate of answering emails within an hour. Some watchers of that opine that could get be a tactic for the law firm to get off the hook from hiring so many summers. In general law firms might have overhired summers for 2022. 

Cliche observation: We live in a world of uncertainty.

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