The Trickle-down Effect: Anticipating the Impact of the Trump Administration on the Legal Field

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Transcript

Robert Half Legal Report

The Trickle-down Effect: Anticipating the Impact of the Trump Administration on the Legal Field

05/30/2017

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Intro: Welcome to ‘The Robert Half Legal Report’ where we discuss current issues impacting the legal profession related to hiring, staff management, and more with leading experts in the field. Robert Half Legal provides lawyers, paralegals and support staff, the law firms in corporate legal departments on a project and full-time basis. ‘The Robert Half Legal Report’ is here on the Legal Talk Network.

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Charles Volkert: Hello everyone and welcome. I’m Charles Volkert, senior district president of Robert Half Legal and the host of our program.

Our guest today is Brett Bartlett, partner with Seyfarth Shaw in Atlanta, where he chairs the firm’s Labor and Employment Department. He also co-chairs the firm’s National Wage & Hour Litigation Practice Group and is a member of Seyfarth’s National Labor Employment Leadership Team.

An attorney for nearly 20 years, Brett’s focus on defending clients and nationwide, business-model-impacting employee-pay litigation and helping businesses avoid it, has allowed him to partner with key clients in the past decade as they survey the legal landscape’s horizon and develop strategies to stay ahead of risks caused by changing regulations, statutes, and activist court rulings. He also devotes considerable time to forecasting staffing needs that can allow law firms and lawyers to keep pace with their clients’ strategic needs.

Welcome to the show today, Brett. It’s great to have you here.

Brett Bartlett: Thanks Chad. I’m really pleased to be here. I appreciate the nice introduction and I’m excited to talk to you today just so folks who are listening can know a little more about me.

I began my career as a lawyer at a small litigation boutique. It seems like a long time ago now. I jumped from there to a regional labor and employment law firm and from there to a national labor employment boutique, and from there to Seyfarth Shaw where I’ve been for about 13 years. Seyfarth is known for its innovation in the legal industry. I love it here because the firm not only allows me to, but it actually expects me to devote considerable time to trying to understand what’s going on at the very tip of the laws affecting our clients and to build teams that can make sure our clients develop strategies for continuing with legal compliance, workforce modeling, and litigation defense. It’s pretty cool and I’m really happy to share my perspective today.

Charles Volkert: Well, again, thanks for being with us and I know our audience is going to get a lot of great insight and expertise from you today, and you and I are going to be discussing how anticipated changes in regulations in government priorities, may impact the legal field in the legal workplace in the months ahead. We’ll take a look and examine practice areas, poised for increased activity, and possible job growth opportunities for specialized legal talent and we’ll certainly explore other legal trends likely to develop in the coming months.

So, we might as well just get right into it. I know we’ve got a packed agenda, Brett, and so as you think although it’s only been a few months since a new president took office, we’re already seeing signs that we could see dramatic changes in policy, regulations, and laws in the coming months and years, in your opinion at this early point in the new administration, what key issues stand out that will likely prompt increased activity in the legal field?

Brett Bartlett: Well, Chad, as you might imagine, I have been focused attentively on what’s happening in DC and what is happening there since ripples across businesses generally and our clients specifically. I’ve also thought deeply about how the new administration will impact the way that our law firm will best serve our clients in the next several years and beyond and that includes thinking about innovative staffing and pricing models as well as how to identify skill-sets that our teams will need to be able to provide top-notch service, and as important, I’ve tried to listen to our clients’ legal departments are telling us about what they might need because of the changes perceived, changes in actual ones that the new administration might cause.

I also have to admit and you might be a little bit surprised by this, but I’m completely enthralled by the business models of our opponents who attack the clients that our firm serves. I’m talking about the plaintiffs’ lawyers in particular but also the government agencies responsible enforcing the shifting regulations that will potentially impact the way that they do business.

I’m just fascinated looking at the way that the plaintiff’s firms make money, how they make their money and how the agencies — the enforcement agencies plan to roll out enforcement will matter a lot in my opinion. All that said if we’re honing in on the general areas of law and policies it will be impacted by the new administration under President Trump.

Most of the experts on my teams agree that we’ll see the greatest impacts deriving from healthcare, labor and employment law, immigration trade, and closely tied to immigration trade, international and cross-border law that might impact the structures of businesses, their locations, the locations in nature of their operations as well as the sources of talented employees necessary to fulfill the objectives of those operations wherever they might be located.

(00:05:18)

Charles Volkert: Well, that’s very interesting and when you think, Brett, about how the labor and employment market moves forward, can you dive a little deeper into that?

Brett Bartlett: Yeah, I have to say, obviously, I’m going to be informed by my employment lawyers’ perspective in this regard. You probably won’t be surprised to hear me say that it remains somewhat hard to predict what impact President Trump’s administration will have on workplace laws. As a lawyer representing businesses across the country and across industries, and frankly of almost every size, I spend a lot of time brainstorming with my partners and teams around how best to help our clients plan for issues that have not yet arisen. We’re trying to forecast things for our clients. My key observations developed from our brainstorming sessions and from questions we’ve heard from our clients are that there is a fairly prevalent optimism, you have the regulatory and the statutory climate affecting businesses will become more favorable as the Trump administration matures.

Some folks lovingly refer to this potential as the Trump bump phenomenon, the more favorable environment that they’re talking about. If those optimists are right from a rollback of regulations and other laws that have constrained the ability of businesses to grow, that’s really the phenomenon that they are talking about.

An example of this might be, the impact of the new Secretary of Labor Alex Acosta on the overtime pay exemption rules that have been installed in Federal Court by a preliminary injunction and which will likely be retracted in some part, once Secretary Acosta has a sub-regulatory team in place, but that kind of optimism while completely understandable it’s still predictive. We’re still trying to predict what the impact of those new rules might be once they’re changed, and I can go on, Chad, if you want me to.

Charles Volkert: Well, I guess, I would say that your insight is very eye-opening as far as how we’re going to watch the impact that policy changes in many different sectors, financial, energy environment, and obviously in the labor employment area really will take hold and potentially increase litigation and obviously compliance work, but maybe you could share with the audience and take a minute to talk a little bit about the business-related issues that you are seeing your clients go through because of some of these changes.

Brett Bartlett: Yeah sure, and I’d like to focus on healthcare and immigration laws in some of these other areas as well and our business clients are really thinking hard about how the regulations will end up impacting their operations on a macro scale as well as on a micro scale, and so they are thinking optimistically about the longer-term impact of favorable regulations and they’re thinking about location to location what will their compliance obligations be and how will their employees and their workforces react to the changes that are going on, and so much of this really is perception, not all of it is actual reaction to laws that have been put into place.

One of the places that businesses are having to contend with these issues is — and there is some uncertainty right now, notwithstanding the optimism in the marketplace around what will happen under a matured Trump administration, there’s still some uncertainty and we’re several months into the administration and haven’t seen actual changes yet, and what we have seen on the other hand and what’s troubling is that we’re seeing a spike in the lawsuits filed by plaintiffs’ lawyers in employment laws and in consumer protection areas as well like the Telephone Consumer Protection Act, but also in the Fair Labor Standards Act area under State Wage & Hour laws, and it’s almost as if those plaintiffs’ lawyers are trying to fill the gap that’s been left behind or at least have been perceived to be left behind by the changes that the Trump administration might make in the near future. So, it really is a time of uncertainty, a time of optimism, but without question there remains risk.

Charles Volkert: And I’m assuming, Brett, that a lot of that has to do with proposed changes whether that’s reductions in taxes, the reduction of regulations for businesses that maintain operations. The president has also pledged to impose substantial border tax on companies, et cetera, are you seeing or how could you predict or what are your clients predicting that some of these anticipated changes will lead to from even an additional work flow not only for law firms but also other service providers in the legal industry.

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Brett Bartlett: Yeah, without question the changes and the predictive impact of those changes is causing the way that our clients retain or engage lawyers and other legal services providers is causing them to look at the provision of services in a different way. There is clearly an increased demand already around international trade law and corporate taxation, financial services law, healthcare law, labor and employment law, our clients are looking for outside counsel, who have the ability to speak knowledgeably and with expertise around those niche areas and they’re looking for in-house lawyers, who have the ability to focus in on those specialty areas as well.

What I found across clients and really kind of surveying the legal industry right now is that, sure, it’s great to be an expert in a particular niche and a client talking to a lawyer for the first time looking for an expert for example in the Fair Credit Reporting Act will want someone who has expertise and can demonstrate credentials in that space, but where the rubber hits the road these days, and I think that this is true both for outside lawyers as well as for inside lawyers, is that it hits the road when you have an expert who doesn’t speak in legalese who can listen to what a client is saying, whether it’s an external client or for an in-house lawyer and internal one, and then translate the legalese into something that makes sense to the non-expert client and can also be translated into practical advice.

And, to be able to give practical advice a lawyer has to understand or be able to understand what a client’s objectives are and has to be able to relate to the client and understand those objectives, and it takes this particular skill-set that it can be learned but oftentimes I think that our clients across the country more-and-more are looking for those lawyers, who do have that skill-set or have the potential to develop it by understanding their own business objectives and then being able to relate each of these niches that we’re talking about, Labor Employment, Corporate Tax International, that kind of thing back to the operations that clients are running.

Charles Volkert: Well, I couldn’t agree more, Brett. Our research indicates that most lawyers report it’s challenging to find skilled legal professionals in today’s market especially those with expertise in the high-demand practice areas such as litigation, commercial law. I think with the growing need for lawyers with knowledge and experiences you referenced, international trade, financial services, and immigration law, we expect a uptick in lateral hiring, and we certainly have witnessed that growing demand over the last number of months and even over the last year or two and anticipate that continuing to intensify, as a driving factor because of some of these other legal issues arising from the new administration.

So, I think it’s been a great discussion up to this point and now it’s time for a quick break.

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Charles Volkert: Welcome back to ‘The Robert Half Legal Report’, I’m Chad Volkert, and joining me today is Brett Bartlett, partner with Seyfarth Shaw in Atlanta.

Before the break, we were talking about lateral hiring trends and the demand for specialized legal talent and I’d like to shift gears a little bit now and talk about M&A.

According to our reports, Brett, there seems to be uncertainty in the impact that the administration will have on mergers and acquisitions, what are you hearing from your colleagues who focus on M&A, what are they identifying as challenges they expect to face in the coming year?

Brett Bartlett: Yeah, Chad, those are really good questions and obviously at the top of mind and particularly for our corporate lawyers and for our clients who are thinking about longer-term strategies, I represent a lot of private equity operations and businesses that are in growth mode and trying to figure out how to cope with laws that have not yet been put into place, does make it a little bit hard.

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Regarding the anticipated Trump-bump phenomenon, I think it is fair to say that it’s still anticipated. Remember those optimists I mentioned in our first segment? There’s still a reason to believe that there’s going to be a Trump-bump even on the deal side but it’s not yet materialized. If anything near-term uncertainty has made for a bit of a lukewarm deal climate, business owners and deal makers want to know first the applicable tax terms, healthcare requirements, and regulatory burdens as all those are baked into deal-pricing and that’s understandable. A target company facing materially reduced cost for healthcare and regulatory compliance might be anticipated to be materially more profitable and thus materially more valuable than the same company operating in the present climate has yet largely unchanged from the Obama administration.

And drilling down a bit farther, we think that the uncertainty around what the administration — this new administration will actually do is directly affecting businesses in short and medium-term strategic planning. For instance, until there’s more clarity around tax reform, immigration, healthcare and the like, business leaders, they’ll just continue to sit on the sidelines while their potential deals are delayed or deferred, and that means — and this is where kind of again the rubber hits the road for us in the legal industry, it means that they are stockpiling cash and they are choosing not to inject it into the marketplace and looking at economic factors that can be harmful, but for us on the law firm side and for the lawyers and law departments, who are thinking about what’s going to happen next, eventually, we will see more favorable regulatory action, and at that point, there is going to be an injection of cash into the marketplace, and there will be these deals are being made. At that point, our deal lawyers, our corporate lawyers are going to be really busy.

One area that I’ve been focused on is more of an employment lawyer is due diligence, and knowing the laws inside and out and how to assess a target business to determine whether it’s actually valuable taking into account all the risks and exposures, that’s where you have the intermingling of those niche skill-sets combined with the ability to do deals, and it’s really a phenomenal opportunity I think in the near-term future.

Charles Volkert: Well, that’s very enlightening, Brett, because we’re seeing some of the same things as law firms partner with Robert Half Legal for increased workloads in the M&A due diligence area and as we provide contract attorneys and paralegals with substantive backgrounds for those initial deal reviews. And so, it sounds like you’ve got some optimism there and it’s always fun to listen to a lawyer talk about economics as well, so I appreciate that, Brett.

During the past year, several litigation reform issues have emerged. For example, the House Passed the Fairness and Class Action Litigation Act, the House Judiciary Committee started addressing the growing trends of mass tort claims being lodged in federal courts, what litigation reform issues do you anticipate during the coming months?

Brett Bartlett: This is yet another place where it’s hard to make predictions, and I’ve learned in recent months that I’m not always the best at making predictions of outcomes particularly around legislation and regulatory action. While the Republicans control of Congress and the presidency would seem to militate towards the passage of the Fairness and Class Action Litigation Act, not that many people give it a realistic chance of passage through both chambers. This is because the bill is expansive and may create undesirable outcomes. For example, it provides that no attorneys’ fees may be determined or paid until class distributions are complete. Then it limits fee awards to a reasonable percentage of payments directly distributed to and received by class members.

As many anti-class action lawyers, and I am one of those. I deal with class actions all the time, but as a lot of us are noting marrying fee awards with the direct distribution requirement might reduce settlement flexibility and might result, as a result in an increased defendant’s exposure. It’s just one of those things where sometimes a business needs to be able to settle and if there’s yet another barrier towards settlement put in place, then that can get pretty tricky and not be all that desirable, and so those critics are coming back and pounding pretty hard on that Act.

(00:19:52)

It seems more realistic that we’ll see incremental changes in particular statutes like modifications, for example, to the Telephone Consumer Protection Act, which has technical violations that it can accrue very quickly under it similar to the Fair Credit Reporting Act that has technical violations that can suddenly accrue to millions and millions of dollars of exposure with very little chance of getting out on a defense judgment, but any of these things that have to have both chambers of Congress support it are going to be hard to get through.

That said, all employers in particular going back to the employment world should pay attention to what’s going on with the Supreme Court’s ruling in the cases that deal with Class Action waivers because if the Supreme Court upholds waivers, then most businesses that have employees, in other words all businesses will probably want to consider whether they have arbitration agreements with Class Action waivers within them.

Charles Volkert: Very interesting. That’s great intel, Brett, and good perspective for us to keep an eye on within that area of practice and just overall within the legal climate.

One of the areas that we haven’t yet discussed is healthcare. Could you share with our listeners how you anticipate potential healthcare reforms, how that’ll affect law firms and corporate law departments and maybe how we might expect changes to affect healthcare litigation in the future?

Brett Bartlett: Yeah, and I’ll take about a minute to go through these because they are important, and this is a hot topic. The potential changes to healthcare laws will to continue absolutely to keep law firms with that specialty practice fully engaged. Medical coverage as you know is an extremely large spend for employers and the healthcare reform laws are really detailed and complex.

Under the Affordable Care Act or the ACA large employers could incur hefty tax penalties for compliance failures, so there’s really money at stake. These laws require employers to offer medical coverage with specific plan designs like covering preventive care or clinical trials in dependents up to age 26, many of these plan designs will remain in place, even under the Bill that’s passed the House now, so even under President Trump’s reform bill. Employers can no longer rely on their insurance agents to navigate these intricate rules that even the large insurance companies are struggling to understand. Employers are going to reach out to specialists in this area and hopes of reducing penalties that they might otherwise have to pay and avoiding the lawsuits that are becoming more frequently filed. This new Bill, the Americans Health Care Act that passed the House impacts employers certainly, the employer mandate, which is the offer of the right kind of medical coverage and only charging employees a certain amount for the coverage or to pay a tax penalty. There would be no enforcement stick that the IRS could use to encourage employers to offer this kind of medical coverage. So there’s going to be issues that arise there, and increasingly, popular plan designed for employers is a health savings account along with a high deductible health plan. The House Bill would increase the limits on the contribution to these accounts and allow older employees to make catch-up contributions to their plan. And so, this is something that businesses are going to have to pay attention to.

So if you think about this, and obviously, there are many more specific changes that would come into place if the House Bill passes through the entire Congress and is signed by the president, we are going to see even more changes most likely at the Senate, and so, lawyers who have the ability to think through how these laws will impact their clients and in-house lawyers who are thinking about how they might be able to counsel their internal clients to avoid penalties and costs under the current laws and to adapt quickly without sparking lawsuits. Those are the kind of lawyers who are going to be gainfully employed for years to come.

Charles Volkert: That’s fascinating, I mean, to think about the downstream work and the future are all sort of pending on a lot of these things that are moving forward or could move forward as a future on holds.

I know we’ve discussed a number of practice areas that are likely to see increased activity, business tax, regulations, healthcare, labor and employment, trade, immigration law, it’s only natural that many law firms are exploring how they can expand their practices to take advantage of these emerging opportunities. What advice can you offer to law firms interested in leveraging policy and regulatory changes being driven by the new administration for their own business growth?

Brett Bartlett: Yeah, Chad, I do have a few thoughts about that. Some of it is really intuitive, I mean, every law firm should be closely monitoring, policy changes, regulatory changes, changes to the law. It’s like drinking from a fire hose right now, and so, there has to be a process put into place to do that, but particularly for anyone who’s developing a niche practice who wants to be known and credentialed as an expert in an area, you have to be on top of it.

(00:24:55)

I will mention that it’s almost impossible to be on top of everything because one of the hot areas right now that all of us are talking about in the employment space and I think this applies to other areas of law as well is that where there aren’t Federal Laws to supposedly protect workers and employees or other laws to ensure that employees are paid in the right way. There are likely to be local ordinances and State laws that come into place. A lot of legislators and even cities are putting into place new laws. So to maintain a grasp on all of those laws across the federal part of it, the state part of it, and the locality part of it is really challenging, but it’s necessary.

Law firms really do need to think about revising their short-term, their midterm, and their long-term plans for hiring. So they need to be identifying partners, who might come to them from other law firms who have developed a reputation as an expert in a certain field and they need to be cultivating the pipeline. Looking both internally for those talented associates, who have demonstrated either an interest in a particular area or the capacity to learn a particular area to become experts, but I go back to this point that I made before.

So often these days what our clients are looking for are the lawyers who have the ability to speak in normal language about complex issues and to relate those complex issues in the safeguards that might be put into place into practical advice based on a strategic understanding of a business’ objectives. That takes a special skill-set, and those lawyers who can demonstrate the ability to have an understanding of how to do that are those who are going to succeed I think.

Now, there is a crutch that I think that some of these lawyers can put into place, who might not have developed the ability to foresee everything that a business might encounter it’s called collaboration. You have to find those lawyers who are able to collaborate with their partners and with their colleagues and with their clients because those who are still operating in individualistic silos and who demonstrate just based on the resume that they only think about what they’re doing and not what a cross platform service provider can provide, those who are not thinking more broadly are going to end up working themselves out of a job I think. So you’ve got to have expertise, emotional intelligence to understand a client’s needs and the ability to collaborate.

Charles Volkert: Well, that’s exactly what we’re seeing as well. When our clients come to us, Brett, many times their first request is a top lawyer with keen interpersonal skills solution-oriented to be able to get into a business discussion with clients versus, I remember, when I first got into this business 18 years ago, it was all about the resumé, where did they graduate near the top of their class or not, and we’re seeing that’s still a component obviously of good candidates or requests for candidates, but certainly not necessarily at the top of the list anymore and you’ve covered a lot of those things and I’m sure Seyfarth Shaw is doing to identify the top talent in the marketplace and we see that same request coming from clients, and the ones that are still very stuck on a resumé, usually are not the ones identifying and hiring the best talent or being able to keep that and your point on collaboration also spot-on.

We continue to see forward-thinking law firms like Seyfarth Shaw and others very focused on mentoring internally, reverse mentorships, how to expand the knowledge base and also those interpersonal skills, leadership skills amongst their lawyers through that type of collaboration and mentorship.

I guess, I would end and I’d like you to add some final thoughts here, Brett, on the fact that our latest research shows that litigation and commercial law are the top practice areas driving job growth in the legal profession, what specialized legal skills that maybe you haven’t talked about yet and expertise do you predict will be most in-demand six months from now?

Brett Bartlett: Yeah and I think that when we use terms like commercial law and litigation, people immediately start thinking on the commercial side about products liability types of litigation or might be thinking about certain kinds of deals, and when I see litigation, I think probably lay people think, well, those are just the people who are doing strictly litigation and not specializing in any area. Almost all the areas of law that I focus on, labor and employment, involve litigation of some sort, involves some commercial aspect and oftentimes have to do with deal making. And so, I think about kind of broadly and to put sort of a bow on it and to think about the areas where I think there’s going to be increased demand or at least continued demand, without question healthcare law, I talked about the ACA and the potential revisions to that going through Congress right now, but we do have an aging demographic across the country and looking at businesses they are impacting elderly healthcare, those will be areas of growth I think for law firm practices, privacy will continue to be an issue.

(00:30:21)

But then if I had to put even a finer point on and look at those hotspots that right now are popping. I mentioned the Fair Credit Reporting Act before. I mentioned the Telephone Consumer Protection Act, both of those laws, they’re very different from one another, in most respects they are similar and that each one has very technical violation that are hard to prove didn’t occur, and when they’re proved to have occurred, they come along with fairly steep penalties for each violation and it’s easy to accrue lots of violations over a period of time, and so there’s a lot of money at stake, there’s a lot of tactical advantage understanding the law as an expert and then there’s also the need for people who can negotiate settlements because most of these cases settle, so being emotionally intelligent around that, it’s very important.

And then just very broadly, and this is almost cliché these days I think, but any area of law pertaining to the gig economy, so thinking about logistics companies, thinking about technology companies, thinking about businesses that employ temporary workers and non-traditional workers, all of that I think is going to be ripe for the picking as we move forward.

Charles Volkert: Agreed, as those industries continue to expand and not only here in the United States but obviously internationally, we continue to see a growing demand for lawyers as well as other legal professionals that have experience in those areas and cross-border work as well.

Well, it looks like we’ve reached the end of the program for today and that was certainly a great discussion. A special thanks to you, Brett, for joining us today and sharing your expertise with our audience.

Before we close, I’d like to let our listeners know how they can contact you and where they can obtain more information about your practice and Seyfarth Shaw.

Brett Bartlett: Thank you, Chad. I sincerely appreciate the opportunity to speak with you today and to talk to your audience. I’m a huge fan of Robert Half Legal and I think that this was a wonderful discussion that we had today.

If anyone wants to reach me about anything that I’ve said or in particular about wage and hour matters, please feel free to reach me on my email address that’s [email protected]. Thank you.

Charles Volkert: Great, and our listeners can reach me at [email protected], and you can visit the Robert Half Legal website for additional information on legal career and management resources including our latest Salary Guide for Legal Professionals at  HYPERLINK “http://www.roberthalflegal.com” roberthalflegal.com.

Thanks again to Brett Bartlett and his expertise and for our audience listening today. Join us next time on ‘The Robert Half Legal Report’ as we discuss important trends impacting the legal field and legal careers.

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