The legal economy and COVID-19 and pride & pirates.

COVID-19 Is Ruining Our Good Times.

Let's start with some good news: law firms are opening up more matters as America reopens. When attorneys open new matters it means they have new work to do and hopefully bill for. Seeing a jump in new matters in the chart below looks like things could rebound. And hopefully, that rebound is a sharp one because billing absolutely plummeted where law firms in May 2020 billed 27 percent less than they did in May 2019.

But don't read too much into the data points in new matters opening. Legal services are a complementary industry. Lawyers and law firms serve individuals and entities that require legal spend and they generally only spend when they have the money to grow and enlist the aid of lawyers with those growing pains. The uptick seems to come from practice areas that were totally put on ice coming back on, like construction jumping from -27 percent from the baseline to almost 30 percent above. It might not necessarily be from the improved health of the economy and a return to normal but a temporary trend up in areas that are finishing up projects all at once that they couldn't complete before the shutdown. Across the board, though nearly all practice areas improved which is a great sign but it's hard to predict the future considering the overall economy is still highly uncertain.

With COVID-19 set to potentially spike again, and the PPP loan program running out of money, the odds new matter creation and billing figures make it back to the baseline soon I think is probably a long shot. The PPP loans made sure employers could keep their staff on payroll with fully forgivable government loans. This also helped keep unemployment at Great Recession rather than Great Depression levels. But absent another package making its way through Congress, unemployment may jump to Great Depression levels when businesses are no longer obligated to keep them employed as a condition of the PPP loans they took out.

And when people don't work or can't get paid they generally also can't spend a lot on legal services. If companies can't even afford to keep their workforce they almost certainly aren't making big spends in legal. According to the Clio numbers, 25 percent of law firms reported having to forfeit billing due to clients' inability to pay as of late May. So even though law firms are opening new matters it won't be a real sign of economic bounceback until America's economy actually flickers back to life. In the face of a potential second wave of COVID-19 this fall and no more government assistance on the horizon, this recovery could take a long time to materialize.

There are some areas of law that were more resilient in the face of COVID-19. Intellectual Property and other business-oriented practices did remarkably OK considering most of the legal industry experienced the bottom falling out. That's good news for LYNCH LLP, the greatest IP law firm to grace this earth. (I promise my shameless plug is over.) Practices that focus on traffic incidents, on the other hand, took a 60 percent nosedive when everyone quit driving to work.

Trying to say what this all means for the legal economy and how firms practice law is hard to say. My perspective is that it will never fully bounce back. Collectively, attorneys are having a Tiger King moment where we realize we'll never totally recover financially.

After the 2008 recession the legal industry similarly never went back to the way it was pre-2008. I wrote a bit about this in the inaugural run of Legal-ish if you want to go back and check it out but the long and the short of it is that companies brought more of their legal services in-house and started using quasi-legal resources to save money. The legal economy contracted as a result. Law firms also didn't learn many lessons or adjust their business models much post-2008. But maybe COVID-19 will cause some permanent structural changes to law firms like incentivizing working from home or allowing flexible work hours to manage family and work. So maybe there's a silver lining. Or maybe we'll collectively stay stubborn and go right back to archaic law firm structures and practices.

If you want to see some predictions about what recovery looks like please check out Keith Lee's post about economic recovery:
https://blog.casestatus.com/what-does-economic-recovery-look-like-and-when/

You can check out Clio's numbers here: https://www.clio.com/resources/legal-trends/covid-impact/briefing-june-17/

Pride & Pirates

It's Pride month and the US Supreme Court ruled that federal employment laws protect LGBT employees in Bostock v. Clayton County. Gorsuch authored the 6-3 majority opinion. And while the majority opinion is something to raise the rainbow flag for the dissent chose to evoke the jolly roger. (More on the pirates below!)

Bostock addresses what happens when employers fire employees based on whether they're LGBT+ status. Bostock joined a gay softball league and was fired by Clayton County. The other petitioner was hired by a funeral home when presenting as male and then fired when she decided to live her life as a woman. (Kudos to the majority for using the preferred pronouns of the petitioner.) The Supreme Court held Title VII protects from that kind of discrimination.

What's interesting about this case is in Gorsuch's textual approach to statutory interpretation. A textualist approach puts greater weight on the meaning of the words as written rather than emphasizing the intent of the drafters or original understanding of their intent. Gorsuch writes:

Instead of relying on an Originalist approach and seeing what Congress meant to say he looked at what the law literally says and concluded that simply because the drafters lacked imagination for what their words fully meant doesn't mean people should be denied the benefit of the text of the law. This is somewhat of a departure from the Scalia days of the court in what The Nine find persuasive.

And if anyone is curious what Scalia might have done you don't need to look further than Bryan Garner with probably the best insight to that. They were friends and published several books together.

And the dissent went to great lengths to jump on what Scalia would have done with a textualist analysis to come to a different conclusion. The dissent has a decent point that Congress in the 1960s never intended to include LGBT people in their understanding of the Civil Rights Act. I think people's initial reaction to the reasoning in the dissent might be short of what it actually deserves. And that might be because the dissent, authored by Justice Alito, decided to use pirate ships to help make their point.

How I imagine Justice Alito views Justice Gorsuch.

Scalia's affinity for textualism is alive here and still used by the conservative justices. It's just a different brand in the majority than the dissent. And while the Congressional intent back in 1964 definitely did not consider LGBT concerns as they exist today what Congress actually wrote down is what controls. In the majority's view if Congress wanted a narrow law they should have written it better. In the dissent's view though this is a statute from recent history. It's easy to figure out what definitions are because there's a massive record to look at and it's easy enough for Congress to fix if they made a mistake or want to change the law.

Is there another take away from this pirate battle of the textualists? Maybe it's that textualism and originalism are a bit like the pirate code—they're a set of guidelines more than rules and they don't control the outcome. They're a vehicle to get to an outcome each Justice wants. That might be controversial so if you made it this far drop your perspective in the comments.

Happy Pride month. This is a great step forward for civil rights and protections for the LGBT community.