The Romanian legal market got overheated in the past couple of years. The numbers went up and competition increased. The industry got more sophisticated and a variety of success stories unfolded.
Some change in conditions was to be expected though – the legal industry is strictly correlated with the economy, and the economy grows in cycles. Hence, there was a lot of talk about a correction.
The correction was postponed time after time and law firms started to plan as if growth would last forever. This is only understandable: the hope that tomorrow will be better is the engine behind any human enterprise. Success compels people to budget for more success.
In all fairness, nobody anywhere in the world was able to predict that we would spend Q2 in a lockdown answering questions about force majeure and planning a safe return to the office. Neither in our industry, nor in any other. But the correction is now here, and we need to deal with it.
The immediate effect was the suspension of some large-scale transactions. Several of them – primarily in financial services, energy, logistics, real estate – were weeks from signing. Most of them will come back in one form or another.
In the short term, several sectors of Romania’s economy will experience a contraction – leaving law firms to redirect or adjust their resources. This is always a painful exercise as specialization (a must in good times) makes it difficult to adapt in times of distress. The game of big numbers is temporarily gone. Adaptability will be the test to pass; firms with initiative will find it easier to navigate.
In the long run, managers will be more careful with recruitment and will recall that caution is a good friend as it was in 2008-2012. The effects in our industry will not show from one day to another. It is a slow-motion movie – you can see the trends developing over time but you cannot expect to see significant changes in the short term. If you compare today’s status quo to what our market looked like 20 years ago – and again ten years ago – you will see that the structure of the market has changed dramatically. But no dramatic move occurred from one day to another.
Change sometimes comes through spectacular leaps, but progress almost never does. Progress requires an understanding of change, careful planning, and seamless execution. And always a large amount of talent put to work day after day. Luckily, the Romanian legal market has its fair share of talent – thus, progress in one form or another is guaranteed.
Coronavirus is not a game-changer. It is merely a safety car on the racing track. Inertia will be an enemy for slowing down and then accelerating again; although the Romanian legal market will be shrinking for the foreseeable future, the return to speed of law firms once the safety car is off the track will be fueled by name, reputation, and talent. In that order.
By Francisc Peli, Managing Partner, PeliPartners