The Leader Column

So here we are, back again after the festive splurge and contemplating what 2002 will throw at us.
After 2001, no one could be blamed for feeling a bit bewildered at trying to predict the coming year. The first three quarters of 2001 now seem like the end of another time entirely. The year started with US firms idly contemplating how they might cope with a respite from the frenetic activity of 2000, then they were suddenly faced with the possibility of a dark abyss opening up before them. Thankfully, the black cloud gradually dissipated, and so far the market seems to have held its nerve. The trouble is that no one seems quite sure what to think or do.
The likes of Davis Polk now appear like an indulgent parent, telling associates first that it cannot afford big Christmas presents this year, then, when they start sulking, it digs down the back of the sofa and comes up with the cash. But then, everyone else stateside is doling out big associate bonuses, which given the state of the deals tables on this page seems like a bit of a gamble.
Here in the UK everyone was busy eyeing everyone else and wondering whether the amount of work sitting on their desk was normal or not. Urban myths abounded of magic circle corporate departments working at 40 per cent capacity or less, and doomsayers started tolling their bells.
However – and I hope I'm not jinxing anything here – it doesn't seem to be too bad so far. Firms are meeting budgets, and while those who put all their eggs in the techy market are having to make a few omelettes, the majority are holding steady. Deal values have plummeted, but there is still a reasonable flow of work.
Fingers are crossed tightly for the second quarter or second half, depending on how optimistic the forecaster. It is hoped that by then the clients will have built up their courage and that the rest of the year will go smoothly.
Until then, law firms need to hold their nerve. Those that are hunting desperately for an insolvency department need to calm down and realise that, even if the recession proper does manifest itself, it's too late to convince clients that you are the best choice to deal with the outcome. Those in charge of the budget should cut down on the jollies, but not the trainees, and remind themselves that any money spent well on clients will repay itself several times over.
Finally, remember that anyone who claims to know what this year holds is a fool and a charlatan. Happy new year.