Trade War Energizes Big Law but Long-Term Revenue Threats Lurk
Welcome back to the Big Law Business column. I’m Roy Strom, and today we check in with trade lawyers who are in high demand by clients seeking to navigate a deepening tariff war. Sign up for Business & Practice, a free morning newsletter from Bloomberg Law.
Chandri Navarro has been drinking hot tea with lemon to avoid losing her voice from days filled with Zoom calls. As a senior counsel in Baker McKenzie’s international commercial and trade practice, she’s been closely tracking announcements on tariffs and helping clients mitigate the impact from an emerging trade war.
Navarro and I spoke on Tuesday, hours after the US imposed 25% tariffs on products from Mexico and Canada and a further 10% rate on goods imported from China. She said she’s been working at a frenetic pace in the 40-plus days since President Donald Trump’s inauguration.
“We have obviously become very close,” Navarro said of the firm’s team, which includes lawyers in Mexico, Canada, Europe, and China. “We are all drinking from the firehose.”
Customs and trade practices are humming across Big Law firms as Trump redraws US policy in real time via public remarks and social media posts. Law firms are touting “tariff task forces” to signal to clients that they can help navigate the new rules.
On Tuesday, lawyers parsed three separate sets of documents related to new trade rules with Mexico, Canada, and China. They’re helping clients determine which goods must be labeled as products of those countries, and how much of the products’ value will be hit with the new tariffs.
Lawyers also are trying to figure out how to mitigate the damage. Can a production process be shifted to the US to lower the tariff impact? Can the legal value of the imported products be lowered so the tariff applies to a lower cost? Can a product receive an exemption from the tariff?
“It’s a mind-stretching exercise,” said Navarro, who joined the firm last year after two decades as a partner at Hogan Lovells. “I’m constantly trying to figure out what is the product, what’s its origin, and do the Mexican or Canadian rules apply.”
For some Big Law firms, bustling trade practices may help offset the potential larger-term costs of a trade war. They’re an example of how diversified firms have some natural buffers to broader economic shocks. Still, a booming trade practice only goes so far if the biggest revenue drivers take a major hit.
Merger activity, one of the most important law firm business lines, has stalled amid the uncertainty of Trump’s tariffs. The total number of deals during the first two months of the year was the lowest in at least five years, according to Bloomberg data.
The law firm business generally follows the health of the broader economy, which is being threatened by a prolonged trade war. Longer term, the tariffs implemented this week could cut 1.3% from US GDP and lead to a rise in the Federal Reserve’s preferred inflation measure, according to Maeva Cousin and Rana Sajedi of Bloomberg Economics.
Fears of stagflation—when growth falls and inflation rises—is a far cry from the Big Law outlook just months ago.
Firm leaders and market watchers anticipated a strong 2025 with the Trump administration expected to usher in a wave of deregulation and dealmaking. Law firms forecast 2025 revenue growth of 7% driven by robust demand growth of 3%, Wells Fargo’s legal banking group said following its fourth quarter survey.
Some firms with large customs and trade practices may outperform their peers in the short term, said Janet Stanton, a partner at law firm consultancy Adam Smith, Esq. But those groups on their own won’t protect firms from a broader downturn in the economy.
“I always go back to clients, and law firms can’t outperform their clients in the long term,” Stanton said.
In Ottawa, Norton Rose Fulbright Canada senior partner Martin Masse’s practice kicked into high gear back on Nov. 1, when a Trump post on Truth Social indicated Canada would be at risk of tariffs if he were to win the White House. Masse set up a cross-border tariff task force with the firm’s trade lawyers in Washington and support in Mexico City.
Canada this week implemented an initial round of retaliatory tariffs against the US. Many Canadian companies have little experience with import duties, Masse said, so lawyers are helping them identify just how much of their products are subject to the levies and ways they might minimize their payments.
The country also is taking feedback from businesses on what products should be exempt from tariffs. Lawyers are helping with a process for Canadian clients to seek exceptions or a deferral of the duty, something Masse said the US has been less interested in accommodating.
“We’ve been very, very busy,” Masse said. “And now that Canada is putting on reciprocal tariffs, we’re seeing a lot more requests for our advice.”
For these lawyers, certain dates stand out in block letters—March 4 perhaps boldest of any so far.
Navarro also remembers Jan. 26, a Sunday, when she hopped on WhatsApp to chat with a colleague in Colombia after learning Trump was slapping tariffs on the country (he withdrew the threat the same day after Colombia relented to receiving deported US migrants). Masse is preparing for March 12, when the US plans to implement global tariffs on steel and aluminum imports.
The lawyers expect plenty more important dates will follow. By the end of my Zoom call with Navarro, I read her a breaking news story: Commerce Secretary Howard Lutnick said the US was considering some relief from the Canada and Mexico tariffs just one day after they were implemented.
“It’s sort of every day now,” Navarro said.
Worth Your Time
On Lewis Brisbois: Lewis Brisbois delayed a portion of year-end bonus payments for its lawyers, Justin Henry and Meghan Tribe report. The firm plans to pay out “formulaic” bonuses later this month, one month later than Lewis Brisbois made them last year.
On Taft: Taft Stettinius & Hollister’s growth strategy paid off in 2024 with revenue and profit increases that surpassed industry averages, Justin reports. The law firm cleared $1 million in profits per equity partner.
On Houston: For Bloomberg Law’s On the Merits podcast, I spoke with Latham & Watkins’ Houston office managing partner Nick Dhesi. The firm’s Space City office hit the 15-year mark last month, and we spoke about “dirt lawyers” and how the Texas legal market has evolved.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.