3 Predictions For 2017

Three years ago, I started my own personal tradition of making predictions for the coming year in my first column in January.

In 2014, I made a few predictions about what would happen with law firms in the coming year — more lateral moves, more mergers, and the like. Those predictions generally came true, and I was feeling good about myself.

In 2015, I renewed all of my predictions about law firms, and I added a couple of guesses about what would happen to bankruptcy and intellectual property practices in the coming year. It’s hard to tell if those predictions came true, but I generally think I wasn’t too far off the mark.

In 2016, I again renewed my predictions about law firms, and I also predicted (among other things) that we’d see a lot of bankruptcies among distressed energy companies. That may not have been particularly hard to foresee, but I said it publicly, and it seems to have happened. (I hear from several firms that bankruptcies in the distressed energy space have been quite important to the bottom line in 2016.)

And now it’s 2017. Time for more predictions.

Oy.

I started thinking in late October about my predictions for the coming year. I assumed, as did everyone else, that the Democrats would win the presidency, and I wouldn’t have to think about big macroeconomic changes. The first Tuesday after the first Monday in November changed all that. So what might the future now hold?

First, it’s time for me to stop making general predictions about law firms. The practice of law has changed permanently. Every year, we’re going to see many lateral partner moves, many law firm mergers, more de-equitized partners, more client pressure on fees, and the like. None of that’s worth repeating any more.

But here’s one thing that may be worth saying: Big law firms will start thinking more about what they pay for real estate. Corporations did this long ago: They moved to cheaper space, put people in cubicles, began insisting that people who travel frequently share offices, and so on. As law firms feel more pressure to maintain their profitability, firms are going to follow suit. Perhaps not in 2017 (because leases come up for renewal infrequently), but relatively quickly, you will see law firms begin trying to save money by making more creative uses of space.

That’s it for law firms’ business practices. How about the law generally? My second prediction is for a surprisingly strong 2017 for big firms. I know that revenue growth is stalling and clients are resisting rate increases, but I think that larger economic trends will spur economic growth — and thus law firm profitability — in 2017.

The Republicans will shortly hold the presidency and both houses of Congress. Republicans are saying that they’ll reduce corporate and personal income taxes, encourage the repatriation of income to the United States, spend a ton of dough (government or private, or some combination) on infrastructure projects, and deregulate corporations. The stock market has loved those proposals in the last two months. And the stock market is right, at least in the short term: Corporations will have money to spend in 2017, and law firms will prosper.

That prediction has a couple of hedges built into it. First, no extraordinary events — large terrorist attacks, massive escalation of wars, etc. — will occur that could throw the global economy off-kilter. Second, this prediction is for one year only — 2017. My crystal ball doesn’t see into 2018. (I bought a cheap crystal ball.) Our current economic expansion has been going on for quite a while now, and it feels like it’s getting long in the tooth. We’re due for another recession — I’m just saying it won’t hit in 2017. And Republicans may find themselves divided over issues like free trade and deficit reduction at some point. Depending on who wins those battles, we may see some policies enacted that will slow growth over time. But again, not in 2017. I’m predicting that 2017 will be a surprisingly good year. All bets are off for 2018 and beyond.

Finally, a very law-specific prediction: We’ll see in 2017 the first product liability case involving 3D printing. 3D printing is becoming a mainstream way of producing parts, particularly in the aerospace industry. That trend is going to continue. Eventually, some 3D-printed part is going to fail, and we’re going to see a case about it; the only question is when. I’m not sure that I have the timing right on this — perhaps the first case won’t be filed until 2018 or 2019 — but I’ll go out on a limb here. (Why do I go out on a limb? Because I love my readers; I risk it all for you. And, besides, who cares if I’m wrong? It’s not like we’re keeping score or anything.) I’ll guess that the first product liability case involving 3D printing gets filed in 2017.

Those are my predictions for the year. To my predictions, I add just one hope: That you have a happy and healthy 2017!

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Mark Herrmann spent 17 years as a partner at a leading international law firm and is now responsible for litigation and employment matters at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at [email protected].