12 February 2024 How do Tech Stocks Impact Law Firms?

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How do Tech Stocks Impact Law Firms?​

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The Story: US tech stocks are doing really well. A big reason is the Magnificent Seven - Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla - which has driven the US stock market to new highs.

What you should know for your interviews: Can you guess why US tech stocks are doing so well? Yes, it’s AI. Investors are excited by the returns they can expect from the future growth of technology, especially Microsoft, Meta, Amazon and Nvidia. These tech stocks have driven the S&P 500, an index that tracks the largest 500 public companies in the US, to record highs - despite the concerns of interest rates and geopolitical uncertainty.

What does any of this have to do with law firms? Law firms have battled a slowdown in transactional work over the past year thanks to an uncertain economic environment. AI promises to offset the uncertainty; the fierce competition to lead the market means more investment, more acquisitions, and more fundraising, which promises to serve the well-positioned law firms.

But the increasing divergence between the US and UK capital markets is a reminder of why many of the leading London law firms are trying to establish themselves in the US market. Freshfields has been particularly aggressive in its US expansion, now with a presence across New York, Washington DC and Silicon Valley, the firm speaks of the US ‘at the heart of its global strategy’. Many will now be watching whether A&O Shearman leads to a successful entrance into the US market. Post-merger integration is very difficult for any company, let alone the challenges that come with merging two partnerships, in an industry where staff have many options.