This is our 28th report on what’s going on in the legal profession. As in all previous reports, it is based on information my colleagues and I continually gather throughout the year from many sources – law firms, other providers of legal services, legal departments, surveys, and the legal and general press.

It is also the seventh report published shortly after a presidential election and the fourth in which the election resulted in a change of party and, therefore, a change of administration. These changes always have some impact on the legal profession, mainly in practice areas, but we expect the Trump administration will have a greater impact on the profession than any of the last three changes of administration.

Some findings are not new, but we include them because they continue to affect the profession. Other findings have not yet been widely recognized, but we believe they already have or will have a significant impact on the profession. The resulting picture is a montage of a legal profession that will continue to change, not just in 2017, but for years to come.

This report presents the big picture; the local picture will vary by individual firm depending on its size, client base, nature of practice, and geographic focus. [Editor’s Note: For a local perspective, see the following article, “Wisconsin Practice Trends 2017: What’s Hot, What’s Not.”]

Red Hot Practice Areas

Cybersecurity continues to be the number one issue for in-house counsel and is becoming so for consumers. While many firms and private practitioners have developed plans for reacting to a cyberattack, many more have still not developed or implemented cybersecurity plans to prevent such attacks. One overlooked factor is what actually constitutes a “breach.” Some firms regard any unsanctioned access of a firm system as a breach while others do not regard it as a breach until something – data, files, or money – has been taken.

Health Care and almost every practice area involved. Of course, the Affordable Care Act (ACA) will have substantial changes or quite likely will be repealed.

Hot Practice Areas

Intellectual Property, particularly patent prosecution and trademark litigation.

Immigration. Obviously. And it will get red hot.

Elder Law. Not just due to the aging population but also due to increased emphasis on healthcare directives.

Regulatory. While there will probably be fewer new regulations or even cancellation of some existing ones, prosecution will continue under corporate integrity agreements (CIAs) and under other compliance issues. The Davis-Bacon Act will at least be modified, if not repealed.

Energy. Oil, gas, and electrical. Coal may warm up, but alternative energy will cool down.

Environmental. The Trump administration is expected to pull back a number of the “Midnight Rules” the Obama administration promulgated before Pres. Trump’s inauguration. In addition, there may be far more friendly policies regarding the exploration and production of both coal and natural gas.

Technology. Of course.

Infrastructure. One of the reasons will be greater support for public-private partnerships.

Financial Services. Although IPOs have been cool, they may get hot in 2017.

Real Estate and Construction. Commercial. Residential is now heating up.

Warm Practice Areas

Labor and Employment. This was hot in 2016 and will heat up again regarding wage-and-hour issues, especially if more states pass “right-to-work” laws.

Cold Practice Areas

Bankruptcy. This will remain cold unless the economy stumbles.

Practice Areas with Mixed Readings

Commercial Litigation. This is pretty hot in MidLaw firms but still cool in most BigLaw firms. Many clients don’t want to pursue the types of litigation they used to. Also, companies’ legal departments, rather than outside counsel, are handling more and more cases.

Corporate. As we reported in our midyear update, this “temperature” depends on a firm’s client mix and on industry practice groups.

Hottest Geographic Markets

New York. Firms that had previously branched into other markets are now opening offices in Manhattan for a variety of reasons: it has become a high-tech center, their clients are doing business in the city, and it looks good to be in New York.

Pittsburgh. As described by Steve Taylor in the Of Counsel 700 Annual Survey, “Its economy is fueled by banking, health care, technology, and education.” Not only are the two long-dominant firms growing but so are other mid-sized firms. Recently, firms from other parts of the country have opened offices there.

Other Trends and Issues

Industry Groups. Manufacturing and distribution is hot as 3D printing continues to grow. Food, beverage, and agriculture have been hot (and we missed listing them in prior reports). Also hot is cannabis. There is significant product liability risk to both manufacturers and sellers as marijuana is infused into edible products. Renewable energy storage is cool. It is still in the early stages, but the Department of Energy is currently funding the development of different approaches to renewable energy storage. This industry group may get hot.

Competition. Competition is no longer just from other law firms. It’s now coming from two other directions: nonlegal business entities, such as LegalZoom; and, for large firms, more and more from the clients themselves, who are using their legal departments and alternative service providers.

Blockchain. This is the technology behind bitcoin, a digital currency that is created and held electronically. Blockchain is a shared digital ledger in which items or transactions are added at the end of the chain, and encryption ensures that it remains unbroken, tamper-proof, and error-free. It is currently being adopted by banks. Advocates say it has the potential to “change the world” as the internet has done.

Law Firms for Churches. In September, Nelson Madden & Black claimed it was the first private law firm in New York City to cater to religious institutions. But it’s not the only such firm in the United States. The office of Raymond Dague in Syracuse, N.Y., and in Grapevine, Texas, does as well. The Church Law Group, a practice area of Anthony & Middlebrook, has built a substantial practice.

Publicly Traded Law Firms. Slater & Gordon in Australia, the first publicly traded law firm in the world, is facing a securities class action. This leads back to the issue of …

Alternative Business Structures (ABSs). This is the current term for nonlawyer ownership or investment in law firms. Still prohibited in the United States except in a limited form in Washington, D.C., they have been “legal” for 15 years in Australia and for nine years in the United Kingdom. We first discussed this issue in 2012. Opposition continues to be strong, although the number of nonlawyer entities continues to increase, and they are providing more and more services.

Employee Class Actions. Dormant and almost extinct in recent years, they appear to be making a comeback since the death of Justice Scalia.

Litigation Funding, which has been little noticed until recently, is increasing as start-ups such as LexShares and Trial Funder attract investors with promises of double-digit returns.

Bar Passage Requirements. After being threatened by the U.S. Department of Education with having its accreditation powers removed, the ABA has started the process to tighten the bar passage requirements for accredited law schools. One part of the proposed rule would mandate that at least 75 percent of a law school’s alumni pass the bar exam within two years after graduation. Currently, the requirement is five years. There are several other factors involved, which may or may not make this change effective. The ABA House of Delegates must approve the measure, and the earliest it can do so is in February at the midyear meeting. If approved, it could go into effect for 2017 graduates who sit for the July bar exam.

Increase in Number of Lawyers. The Of Counsel 700 Survey reports a 3.7 percent increase in 2016. In view of the increasing over-capacity in the profession the past few years, and the decreasing number of law school graduates being hired, this is a huge surprise and, at first glance, doesn’t make sense. However, Of Counsel says this blip is due to timing and that the overall trend continues to be downward.

Fewer Private Practice Jobs for Law School Graduates. According to the National Association of Law Placement’s 2015 survey, although the number of jobs in large firms increased, the overall employment total was the lowest since 1996. While the percentage of graduates who obtained jobs has increased slightly, this was the result of the steep drop in overall law school enrollment, which continues. Not a good picture for the future. But what can be done to improve it?

Scamblogging. This is a category of online writing by debt-burdened law school graduates who are convinced their law schools misled them about their opportunities for employment.

Student Debt. A few firms, such as Orrick, Herrington & Sutcliffe, are offering new associates cash to help them pay their student loans until they qualify to receive a bonus.

First Trans-Atlantic Alliance. While many U.S. firms have forged alliances with firms in Asia, Womble Carle has become the first U.S. law firm to forge an alliance “across the pond,” in this case with U.K. firm Bond Dickinson. Will there be more?

Summary

What we have reported here point out some examples – but by no means all – of the developments that are affecting and changing the legal profession.

This report could not have been developed without the participation of my colleagues. I am most appreciative for their input. Each of us maintains our commitment to the legal profession but with concern on whether it will continue to adapt to change as it has always done in the past, albeit often slowly.