In my last posting about this data-driven template I developed in order to chart practice area trends, I said I would post an example of how this works with respect to an actual practice area. I have selected Financial Services, one of the most dynamic and diversified practice areas to emerge in the 21st century.
Supply and Demand. Does the demand for talent exceed the supply of qualified individuals? Yes. Financial services is a wide-ranging and ever-expanding field. In the aggregate (i.e., mainstream law and JD Advantage functions), demand for financial services professionals far exceeds supply.
Number of Job Opportunities. Does the practice area offer a large number of job opportunities relative to other practice options? Yes. Financial services is immense. Depending on the definition, it constitutes around 20 percent of U.S. Gross Domestic Product (GDP), or one-fifth of the economy. Over time, its percentage share of GDP has steadily increased.
The financial services industry today employs more than 6 million people, including more than 100,000 attorneys. According to the U.S. Department of Labor, 920,700 people were employed just in the securities and investment advisory sub-sector at the end of 2015 (the last full year for which statistics are available at this writing). Moreover, financial services companies engage thousands of outside counsel law firms. In addition, several thousand attorneys work for government financial regulatory agencies, self-regulatory organizations (such as the Financial Industry Regulatory Authority [FINRA],), standard-setting entities (such as the National Association of Insurance and Financial Advisors), and international organizations that hire American lawyers (such as the Bank for International Settlements).
JD Advantage Job Opportunities. How many different job titles? Financial services encompasses more than 60 JD-Advantage job titles in addition to “attorney.” Demand can vary considerably depending on the specific job title. For example, compliance, risk management, international trade specialist, mergers & acquisition specialist, and public finance consultant positions are in great demand; consumer response specialist and loan specialist jobs less so. Is the number of JD Advantage job titles increasing? New law-related job titles are emerging every year; the most recent ones include those associated with the rise of financial technology firms, the sudden emergence of “blockchain” business models, increasing concerns about elder financial abuse, and the literal industry-wide panic about data protection.
Specialization. Is the field becoming specialized? Few practice areas can claim to be more specialized than financial services. Major sub-sectors include: banking, securities, insurance, asset management, and fintech.
Sustainability. Does the practice area have staying power? Yes. As long as money counts, there will be a demand for financial services professionals. Moreover, financial services is in constant flux, buffeted by continuous congressional churn, state legislative tweaking, international organization pronouncements, a virtual tsunami of court and administrative decisions, rules, legal opinions, and enforcement actions by the many regulatory and administrative agencies that own a piece of the financial services pie, not to mention foreign country regulations that impact U.S. banks and other financial institutions.
Anytime you run across a practice area where change is a constant, that is populated by multiple players, and is marked by intense competition, that is very good news for attorneys. These characteristics keep demand high in addition to offering interesting work that is intellectually challenging and ongoing.
An Upward Curve. Is the practice area a growth industry? Yes. The power of money to stimulate creativity is perpetual. The securities subsector of the industry, for example, shows great potential for employment growth, with increases approaching 10 percent a year.
Geographic Scope. Are jobs available nationwide, or at least in a large number of geographic locations? Yes. Financial services positions for lawyers are literally everywhere. For example, even in the small, rural community (population: 10,000) that was the primary focus of my book, Practicing Law in Small-Town America (American Bar Association, 2012), the small community bank employed an in-house counsel plus one full-time and one part-time compliance officer, both with law degrees.
In addition, financial services is a global industry. It has been a globalized market longer than almost any other industry. U.S. financial firms have a large body of experience from which to draw when it comes to competing and remaining profitable in a global arena. They are far ahead of other industry sectors with respect to this. In 2015, the U.S. exported $119.6 billion in financial services and insurance and had a $46.67 billion surplus in financial services and insurance trade (excluding re-insurance, financial services enjoyed a surplus of $88.4 billion). These trade surpluses are in sharp contrast to the overall U.S. trade imbalance, which has been mired in negative territory for many years.
Affinity Groups. Are there multiple legal and law-related membership organizations? There are more than 50 financial services trade and professional associations that count lawyers among their members. Is the number of such organizations growing? Yes. As new financial products and cutting-edge issues emerge, new associations are not far behind. Example: FinTech has recently spawned a host of new affinity groups.
Relative Ease of Entry. Can the learning curve be ascended by a novice attorney? Yes, depending on the specific job. Trust officers and pension law specialists, for example, are often open to entry-level attorneys. Is affordable supplemental education or training available? Yes. Low-cost, often online, asynchronous certificate and comparable programs are available for many financial services positions. Many of these are sufficiently non-invasive In terms of time and money so that they can be earned at the same time as a JD.
Ideally, It Should Be New or Different. Does the practice area allow opportunities for practitioners to be among those who are “first-past-the-post?” Yes, depending on the subsector. While financial services law is by no means a new practice area, many facets of it lend themselves to cutting–edge opportunities where the learning curve is so new and fast-changing that everyone, experienced attorneys and novices alike, are ascending it at the same time.
Moreover, every new regulation—and they are arriving in bunches—prompts regulated entities to devise creative ways around it. See, e.g., the securitization devices, such as Collateralized Debt Obligations, Credit Default Swaps, etc—that contributed so mightily to the Great Recession. In addition, there are always new technologies that generate new issues that have to be considered. Example: Probate, estate, trust, and financial planning professionals are now in the early stages of incorporating the management and protection of digital assets into their practices.
Distinctive Value Proposition/Competitive Advantage. Is practice area knowledge able to provide elements of a unique selling proposition for a future job campaign? Yes. Knowledge of the financial services industry and its specialized sectors are salable propositions across multiple economic sectors both within and outside of financial services. Note. In our volatile economy, it is critically important that your job due diligence always include consideration of where you can go next.
Compensation. Does this practice area allow student debt repayment obligations to be met? Yes, depending on the specific job title. Note. At this writing, President Trump’s Fiscal Year 2018 budget proposes eliminating the major student loan forgiveness program designed to help government and nonprofit employees, including lawyers, with their student debt. It appears that the program would only terminate for new borrowers after July 2018. Attorneys who have already incurred education debt would remain unaffected. The Department of Education’s Public Service Loan Forgiveness program (PSLF), excuses borrowers’ loan balances after they work for either government or a nonprofit for 10 years. The program is quite popular with Congress (with the exception of Republican deficit hawks). In addition to terminating PSLF, Trump’s budget proposal would end subsidized loans for low-income students and make students pay more of their earnings each year under a revised income-based repayment plan. It will be up to Congress as to how much of this will actually happen.
Threat Analysis. Is the practice potentially subject to substitution of a human lawyer by a disruptive technology such as artificial intelligence (AI)…or something else? Yes, again depending on the specific job. As a rough rule of thumb, positions that are “number-heavy” or ministerial in nature, such as trust management, are most at risk of being taken over by AI. Financial planning is also an example of such a position.
Your due diligence about financial services jobs must also take deregulation into consideration. While many observers consider that financial services is under-regulated relative to other industries, Congress is moving ahead with pulling back on the Dodd-Frank Act which would, if achieved, lead to some deregulation. If this passes, it is likely that it could have some negative job impact in certain areas. The exact impact is hard to predict because sometimes deregulation has generated as many job opportunities as regulation and re-regulation. Examples include telecommunications and airlines.
You should also become knowledgeable about how “FinTech,” the merging of financial services with technology, might adversely affect traditional financial services providers. Fintech is a disruptive phenomenon that could put slow-to-react old-line firms in existential jeopardy.
If you aspire to a property and casualty insurance job, you must also factor in the potential impact of self-driving vehicles, which are predicted to dramatically reduce the number of roadway accidents, meaning that claims job occupied by lawyers as well as “captive” insurance law firms at the local level could face an existential threat.
If so, how soon could this happen?
AI. AI is already making inroads in certain financial services sub-sectors, but at varying rates depending on employer size, location, and technological enthusiasm.
Deregulation. The Trump administration has already displayed its deregulation colors by rescinding many of President Obama’s executive orders. The next steps in this process require congressional approval and that has, to date, proven to be very difficult to achieve. Deregulation is likely to hit harder in major financial centers (such as New York) than elsewhere.
Fintech. The merging of financial services and technology is well under way and will continue to expand and accelerate.
Autonomous vehicles. Self-driving cars and trucks are on the cusp of viability. An increasing number of states are authorizing the more than 60 companies developing this technology to test it on their roadways.
Conclusion
Financial services passes the hot practice area test with flying colors. It easily satisfies almost all of the Practice Area Analysis Template criteria. However, the threats to certain financial services sectors are very real and must be part of every attorney’s due diligence.