This is our 29th annual report on what’s going on in the legal profession. As in all the previous reports, it is based on information my colleagues and I continually gather from many sources – law firms, legal networks, other providers of legal services, legal departments, surveys, and the legal, general, and business press.

It is also the eighth report published the first full year after a presidential election and the fifth 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. In our last annual report, we anticipated the Trump administration would have a greater impact on the profession than any of the last three changes of administration, and that is proving to be the case.

As always, this is not an attempt to report on every development, many of which are obvious and generally recognized, but only on those that, in our opinion, have or will have an impact on the profession. The resulting picture is a montage of a legal profession that will continue to change, not just in 2018, 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. For a local perspective, see the following article, “What’s Hot, What’s Not: Wisconsin Practice Trends 2018.”

Red Hot Practice Areas

Four years ago we first reported that a few firms were restructuring their practices into industry groups containing multiple practice areas. This trend has continued.

Health Care. Health care and almost every practice area involved are red hot, no matter what has happened or will happen to the Affordable Care Act (ACA).

Immigration. Regardless of what policies the Trump administration pursues, immigration will continue to be red hot.

Cybersecurity. This is the number one issue for both in-house counsel and consumers. Many in-house counsel are seriously considering outside firms’ cybersecurity practices when making hiring decisions. As cyber attacks and theft rise around the world and law firms remain prime targets, cybersecurity will continue to be a red hot practice area.

Hot Practice Areas

Financial Services. The economy will continue to strengthen. This will fuel almost every area of financial services, including initial public offerings (IPOs) and mergers and acquisitions.

Food and Beverage. Labeling, ingredient, and testing requirements will continue to increase. Legal matters regarding restaurants also are on the rise.

Bitcoin. As bitcoin and other digital currencies gain public and investor interest, some lawyers have developed the expertise to represent clients in the cryptocurrency industry. Other lawyers might have clients who wish to pay legal bills using bitcoin.

Elder Law. As we have been reporting, elder law is hot not just due to the aging population but also due to increased emphasis on health care directives.

Sports. This is hot particularly for sports-related contracts, such as for teams, players, management staff, venue, television, and so on.

Real Estate and Construction. This is hot for both residential and commercial properties in most areas of the country.

Getting Hot

E-sports and Gaming. E-sports, the competitive playing of video games, is taking e-gaming to a whole new level. Legal work will involve negotiating team agreements, player agreements, media deals, licensing agreements, sponsorships, venue agreements, and more.

Cool Practice Areas

Commercial Litigation. The number of cases, and therefore the profitability, in most large and mid-size firms continues to decrease although there are exceptions. However, as we reported in our midyear update, there are reports that litigation funding is regaining strength.

Labor and Employment. Separate from immigration, this is a cooling practice area. [Editor’s Note: However, as reported in “What’s Hot, What’s Not: Wisconsin Practice Trends 2018,” recent events such as the #MeToo movement against sexual harassment will make this practice area heat up.]

No Reading Yet

Environmental. California, New York, Oregon, and Washington are increasing their regulatory activity, so this practice area is gaining some traction in those states. Elsewhere, we have no reading yet.

Tax. A few weeks after this report came out in early December 2017, the House and Senate passed the tax reform bill (the Tax Cut and Jobs Act of 2017). As a result, expect more activity in this practice area.

Hot Geographic Markets

Dallas. One of the most notable signs was the international law firm Winston & Strawn’s opening here in February 2017 with a group of partners from eight major law firms. Dallas is one of the nation’s fastest-growing financial and business centers.

Louisville. The health care industry has been traditionally strong here, but a convergence of recent events make this a hot geographic market. A significant public investment in the city, and a lot of people moving back into it, is attracting small and mid-size businesses and increasing the demand for legal services, which in turn is attracting firms to the area – but not the large national firms. And, enrollment at both large universities – Kentucky and Louisville – has resulted in an increased number of law school graduates.

Other Trends and Issues

Alternative Legal Services Providers (ALSPs) continue to increase in number as well as in the breadth of services they offer. However, note that there are still a substantial number of smaller in-house legal departments that need specialized services or expertise but do not yet use ALSPs. A recent survey, conducted by Thomson Reuters Legal Executive Institute and others, defined ALSPs as those entities that “present an alternative to the traditional idea of hiring an attorney at a law firm to assist in every aspect of a legal matter.” ALSPs deliver services, for example, by using contract lawyers, process mapping, or web-based technology.

Pressure on General Counsels. General counsels are experiencing more pressure to not only control costs but also provide business advice as part of a company’s or organization’s management team. Even the largest in-house legal departments continue to face pressure to reduce costs. In-house client teams continue to increase in both number and size in larger client companies.

Corporate Legal Operations Consortium. This group is comprised of people within corporate law departments who develop and keep the metrics on cases won and lost, fees billed, and even diversity, to provide information to general counsel so they can determine who they want to assign to a specific case or deal.

Law Firm Networks. As more of these are formed, they offer clients an alternative to efficient and targeted legal services without clients having to research large firms. A law firm network is a membership organization consisting of independent law firms that want to expand the resources available to each member for providing services to their clients. The network members may be formally or informally linked to one another depending on the purpose of the network.

Nonlegal Subsidiaries. Fifteen years ago, several hundred firms owned and managed nonlegal subsidiaries in a variety of industries. Estimates are that many of these have continued. If properly integrated into the structure of the firm and well-managed, they can enable firms to counter revenue and profit challenges as well as provide expanded service to clients.

Multidisciplinary Practices (MDPs). Some of the larger firms have gone beyond the subsidiary structure and have hired nonlawyers, for example consultants and other professionals, and integrated them into the practice- or industry-group structure as part of teams to serve their clients.

Fee Sharing with Nonlawyers. The District of Columbia is the only U.S. jurisdiction to allow fee sharing with nonlawyers. Otherwise, fee-sharing rules are not federally mandated but are set state-by-state. For the last four years we have reported on the small but growing momentum to change these rules and allow nonlawyer ownership of U.S. law firms. Now, with PricewaterhouseCoopers’ forming a separate entity called ILC Legal, the Big 4 accounting firms will be perfectly positioned to take advantage of new rules and pose a big threat to the law firm business.

Less Need for Lawyers. Simultaneous with the gradual trend toward fee-sharing with nonlawyers is the continued growth of technology-powered services. While lawyers are needed at various stages to help build these services, there is increasingly less need for lawyers in many areas to deliver them.

Legal Incubators. A small but steady increase in the number of these programs continues to provide recent law school graduates with the training and infrastructure they need to launch solo practices.

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. Blockchain is being tested in other uses, not just in relation to bitcoin. This is part of the movement in certain states, such as Arizona and Nevada, to enact legislation or issue guidance regarding new technologies and digital currencies. As it becomes more widely used, this industry should expect more regulatory efforts.

Summary

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

This report, like all previous reports, could not have been developed without the contributions of my colleagues. I am most appreciative of 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.