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I batted .500 on my big predictions for 2020.
Three months ago, before the pandemic, I predicted that (1) because Bloomberg was essentially entering the race on Super Tuesday, the Democrats would have a brokered convention this year and (2) a global pandemic would hit in March, instantly crushing the global economy.
I was wrong on the first half, but I was the only person in the world who nailed the second half.
Wait! Those damn editors at Above the Law! I just reread my post, and the editors must have replaced the paragraph about the global pandemic with some nonsense about the economy remaining strong through the election. I can’t believe it!
Anyway, now you know the value of my predictions. So here are a few more, about how COVID-19 will affect law firms in 2020.
(I write these columns a few days before they get posted on Monday mornings. And the pandemic is moving quickly, with events daily outrunning predictions. But I’ll give it a try anyway, recognizing that predictions that I make on Wednesday many have already been proven true or false by the following Monday.)
First: Litigation is sunk for 2020.
Hearings are off. Depositions are off. Trials are off. Litigators are sitting on their thumbs.
Many clients, trying to conserve cash, are telling lawyers to slow the pace of litigation.
But that’s not the half of it.
The pandemic is going to last longer than folks believe (here on March 25, when I’m typing). I know that President Donald Trump says he’s going to reopen the economy by Easter. He’s smoking something.
The healthcare crisis in New York City will get worse for another couple of weeks. Other cities will quickly suffer the same fate. We’ll be watching Italy and China to guess when a second wave of disease will begin if we release people from their homes, but no politician will run the risk of being at fault for people’s deaths. When our 15 days of staying home expire (here in Illinois, on April 7), the governor will decide that we must stay home for another 15 days, and perhaps another 15 days beyond that. When Chicagoans are finally freed from captivity, folks who haven’t been restricted in their movements will come back into town and start the plague all over again.
If we’re not successful in “flattening the curve,” many people will die in the next couple of months. But if we are successful in “flattening the curve,” then the pandemic will linger for much longer — people will become ill over time.
I’m going to be an optimist here: The pandemic will linger, but litigation will be in the doldrums all along. The year will not be good for litigators.
So, too, for the deal lawyers. Companies are conserving cash. Public markets are cratering. Private equity is in distress. Portfolio companies are seeing supply lines disrupted. PE firms can’t raise money to do acquisitions or find money to do intelligent exits. This will last for a while.
The global economy is getting hammered, and law firms will follow the fortunes of the economy as a whole.
The only practice area in demand will once again be bankruptcy, as we go through the 2008-09 cycle all over again.
Overall, 2020 will be a very, very, bad year for law firms.
That’s it for predictions. Here are stray thoughts.
First: When people are out of work and can’t feed their families, but own guns, that’s a bad combination.
Second: Two years from now, when this is over, someone will do a study of whether this pandemic disproportionately affected the political parties. I’m not sure how this will cut: Democrats tend to live in big cities, where “social distancing” is hardest. But Republicans tend to listen to Fox News, which told people for months that the pandemic was a hoax, and people should continue on with their lives. A good scientist could probably control for those factors and tell you which party suffered the most from this plague.
Third: Clever plaintiffs’ lawyers are probably already thinking about how to sue Fox News for the deaths of elderly Republicans. “Grandma watched Fox News, was told the virus was a hoax, went out to the movies, caught the virus, and died. Who’s fault is that?” Discovery may easily unearth evidence that Fox knew (or should have known) that its statements were false when made. Causation will be tricky to prove, but I bet the trial lawyers (who skew Democratic and would love to put a Republican-leaning network under siege) will take a chance on this.
Lastly, suppose I woke you up in the middle of the night and asked you this question: “Quick! A person owns a company. Things outside the company’s control cause the company to make a huge profit. Does the owner of the company get to keep the profit?”
Go back to sleep. A half hour later, I wake you up again: “Quick! A person owns a company. Things outside the company’s control cause the company to suffer a huge loss. Does the owner of the company have to suffer the loss?”
I’m not sure how you’d answer those questions, but don’t you have to give the same answer to both questions? (Yeah, yeah: Maybe you’d have to adjust for tax payments when you think about earning money. And maybe some companies are truly essential to national defense, so you don’t want to bankrupt them in a time of losses. But, as a general matter, don’t you have to find one principal here and stick with it?)
Or maybe I’ve already got cabin fever. It’s gonna be a long 30 days.
Mark Herrmann spent 17 years as a partner at a leading international law firm and is now deputy general counsel at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Drug and Device Product Liability Litigation Strategy (affiliate links). You can reach him by email at inhouse@abovethelaw.com.