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Lawyers and the Recession

Monday, March 9, 2009  |  posted by Hugh Hewitt

The Washington Post reviews the impact of the recession on “big law,” the large firms that account for most of the high profile business and litigation work in the U.S. As with recessions past, law firms are laying off partners and associates and cutting rates as well as giving fee caps for discrete matters such as appeals. Lots of lawyers are suddenly exploring new careers.

This is a particularly sharp downturn, but it is the third I have watched since leaving government in 1989. My own firm was begun in the deep recession of 1991 when my partners and I decided we could offer substantially lower hourly rates to large corporate and real estate clients which were if course eager to save on their legal costs. There’s thus an echo for me in these graphs from today’s story:

“Everyone realizes the big law firm model is broken,” said Willard, a partner in Silicon Valley-based Virtual Law Partners, who works out of his office — adjacent to his kitchen and family room — at his Reston home.

Although thousands of lawyers and staff members across the country have been let go during the past six months, Willard and Virtual Law’s founder say that since June they have been adding three partners per month. “When you tell people, ‘I’m going to drop my rates 25 percent,’ it’s a pretty easy decision” for them to hire you, Willard said.

I don’t think the big firm model is “broken,” just undergoing one of its regular contractions and spin-offs that reintroduce efficiency and competitiveness into service and rate structures. It is a cycle that is good for the law and very good for clients.

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Doubts About Dodd

Monday, March 9, 2009  |  posted by Hugh Hewitt

Chris Dodd, along with Barney Frank, are conservatives’ favorite fall guys for the housing-credit bubble that has upended the markets and deepened the recession. Dodd’s home state voters in Connecticut aren’t happy with the long-serving Dodd, as Time Magazine reports in the new issue. Key among the concerns over Dodd:

Much of Dodd’s current woes stem from a pair of mortgages that he must wish he had never gotten. His reputation still has not recovered from the revelation last year that he received a sweetheart deal on his mortgage, saving upwards of $75,000 courtesy of Countrywide, one of the biggest pushers of the subprime mortgages that have landed the U.S. economy in such dire straits. Connecticut officials say there is no evidence of wrongdoing, and Dodd, who has allowed reporters limited access to his mortgage documents, denies he got any preferential treatment and insists he is going to refinance with a different bank. “I made the mistake of not addressing it earlier,” Dodd concedes in an interview. Still he will not allow reporters to further examine the “hundreds of pages” of mortgage documents, saying, “no one has ever showed as much as we have.” But the scandal has left a bad taste with Connecticut voters; in a January Quinnipiac poll, 56% of them said the Countrywide connection made them less likely to vote for Dodd.

To challenge Dodd the GOP would need a candidate with a story and an abaility to stay on message, and Larry Kudlow is often mentioned as just the sort of candidate who can generate a lot of enthusiasm by virtue of his personal story of recovery from addiction, finding faith, and his sincere love of free markets. Whether Kudlow wants to trade in his very successful run as a talking head is the big issue, but if he does, the origins of the crisis will be center-stage throughout 2009 and 2010 –a very good thing for the GOP generally.

The “Cardcheck Congress?”

Monday, March 9, 2009  |  posted by Hugh Hewitt

Two months into the new Congress, and unions are about to begin the big push for legislation to destroy the secret ballot in union organizing campaigns.

Politico covers the run-up to the legislative launch here, and runs down the lobbyists here.

Though numerous e-mail skirmishes show up in my inbox, none of the groups, pro- or con-, have yet appealed for air time to argue the importance of the issue, which is strange given that this is one of the few debates of 2009 wherein the response from listeners directed towards the key swing senators such as Blanche Lincoln and Mary Landrieu might actually matter. Perhaps Rick Berman will want to appear to state the case against card check. Union spokespeople are of course welcome as well.

The Polar Bear and You

Saturday, March 7, 2009  |  posted by Hugh Hewitt

I started writing about the polar bear and the Endangered Species Act in early 2008. The quick summary: Environmental activists pushed for the listing of the bear as a first step in regulating all greenhouse gas emissions in the lower 48, and to do so in a far more brudensome way than any cap-and-trade system envisions. When the Bush Administration listed the bear last year, it did so with a proclamation that the bear’s “endangered” status could not be used to regulate projects outside of the area of its native habitat, and then followed up with regulations to that effect.

Yesterday the Senate voted 52 to 42 to in essence revoke those regulations and that declaration. When a final spending bill passes next week or the week thereafter, the polar bear will be just another endangered species, and any federal permit that can be argued to impact the species –say by allowing greenhouse gases to be emitted in greater quantities in connection with offshore drilling in the Gulf of Mexico– will have to pass through a “consultation” with the U.S. Fish & Wildlife Service. Environmental groups can sue to force such consultations. Such consultations are very expensive and time consuming, and while the polar bear’s huge shadow on the lower 48 will be very good for my law practice, it will be very bad for an economy in recession.

No industry group has yet begun any sort of legal action to forestall the use of the polar bear to regulate such things as highway construction or energy exploration, trusting perhaps in the promises of the now departed Bush Adminstration officials who thought they could outsmart the very big brains and very good lawyers of the environmental movement. When the first demands are made on federal agencies to consult on impacts to the polar bear, there will be no excuse for surprise or shock. The good news is that the underlying rationale for the listing of the species remains very suspect and will eventually come before appeals courts and hopefully SCOTUS. But until then, chalk another loss up for economic growth, energy independence and property rights.

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