Areas of Demand:

Beginning in the fourth quarter of 2008, the recessionary economy coupled with the uncertainty about predicting the timing of a recovery has affected the permanent hiring decisions of a significant number of our in-house and law firm clients. The merger and acquisition “deal flow,” which traditionally feeds a number of collateral practice areas, has slowed to a fraction of its normal activity. Even litigation, which historically has been a beneficiary of a weak economy, has remained slow (as we previously reported); although we expected litigation activity (and electronic discovery projects) to appreciably increase by the second quarter of 2009, this has yet to materialize, as well. Intellectual property expertise, particularly in the electronic and electro-mechanical arts continues to be in demand.

We anticipate that bankruptcy and debt restructuring work will gradually filter down to Texas from the money centers on either coast (we are already seeing firms assemble new practice groups in these areas) and that the policies of the new administration in Washington, D.C. will generate work in the labor and employment and regulatory compliance arenas. Additionally, it is hoped that the ambitious national economic stimulus plan will eventually generate new transactional work for law firms of all sizes.

Because corporations are becoming less tolerant of their outside law firms’ annual increases in hourly billing rates, it is likely that mid-size and smaller law firms who can provide competent legal advice at more competitive rates will be well-positioned to win an increasing share of work from understaffed corporate law departments. Although current budgetary restraints on the in-house legal function are expected to decrease demand for new hires near term, we anticipate that opportunities for specialists in areas such as government regulation (FERC, FCPA/antiboycott, foreign trade, environmental), traditional labor, employment discrimination/wage and hour, alternative energy, government contracts, intellectual property, compliance (ethics and governance) and securities ('34 act) will eventually prevail over such restraints.

We anticipate an increased demand for temporary legal professionals by both law firms and corporations, particularly at the “knowledge worker” level, as a means of addressing not only workload spikes and specialty expertise requirements but also permanent headcount restrictions.

Local Markets:

Houston remains the strongest of our local markets, although a sustained decrease in the price of oil and gas will adversely impact clients at all levels of the industry (upstream, midstream, downstream and energy services) and the collateral industries which depend on the energy industry for revenue. Fort Worth will also be adversely impacted by low natural gas prices which have driven a significant amount of energy transactional work for local law firms in the past several years. As more of a financial services, technology and manufacturing economy, the Dallas market could be the most immediate beneficiary of legal work to be generated by the national stimulus plan. We expect demand for legal services in Central Texas to remain at the current low average level.