Document Type

Article

Publication Date

Summer 2009

Abstract

The current financial turmoil shaking the world illustrates the connectedness of national markets and economies. Legal practice is no exception: lawyers and their firms are experiencing the upheaval along with their clients.1 This has resulted in new opportunities for lawyers and firms–in bankruptcy and restructuring and, likely in the future, in regulatory advising as well–and, at the same time, in substantial challenges. The promise of benefits from a diversified practice–in terms of both substance and geography–is being tested as lawyers and law firms follow their clients through the uncertainties of the current economic conditions.

As law firms cut the size of their legal and non-legal staffs and decrease compensation expectations, they also are capitalizing on the benefits of a geographically diverse footprint of practice by looking to overseas activities as opportunities for growth. The number of firms announcing new offices in the Middle East, for example, has not slowed during the economic crisis.2 Over the last twenty years or so, the growth of overseas activities of the largest U.S.-based law firms has far outpaced their growth within the United States, by a rate of ten-to-one.3 In 2007, more than 15,000 lawyers worked for the National Law Journal 250 firms in more than 550 offices located outside the United States.4 Indeed, two U.S.-based law firms with substantial investments in overseas offices joined the ranks of four of the London “Magic Circle” firms in a new category dubbed the “global elite.”5 But the description so far relates only to the most visible part of the story of the importance of overseas-related work for U.S. lawyers. Overseas-related work also supports lawyers working for firms that do not have formal international footprints. These may be firms with foreign clients or U.S.-based clients involved in offshore activities or partnerships. They may be firms that are members of international networks or associations of lawyers that serve as a source of referral relationships, among other things. Each of these arrangements points to the continuing importance of keeping watch over the regulatory and business environment for lawyers outside the United States. The U.S. Department of Commerce Bureau of Economic Analysis estimates that the export of U.S. legal services generated $6.4 billion in receipts in 2007, while imports of legal services were valued at nearly $1.6 billion, yielding a four-to-one surplus for balance-of-payment accounts.6 If globalization continues, as appears likely, lawyers may be able to rely on overseas activities as a sort of hedge against instability at home. Access to overseas legal markets, then, remains an issue of high priority.

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