Financial overhaul has been signed, but lawyers' work on law is far from over
There will be no rest for the weary as the very lawyers and lobbyists who spent the past two years preparing for the passage last week of the game-changing financial regulatory overhaul now turn to both deciphering the immediate impact of the behemoth law and influencing its implementation.
When President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law July 21, it was just the beginning for the armies of lawyers and lobbyists tasked with representing a variety of financial services companies that will be affected by the seismic legislation.
In the near term, long nights will continue as lawyers attempt to answer a barrage of questions by issuing client advisories, hosting Webinars and taking phone calls. But more significant, industry leaders say, will be the shift of power that occurs as regulators flesh out the guts of the legislation during a multi-year rulemaking process.
"The center of the financial world has moved from Wall Street to 15th & Pennsylvania -- the Treasury Department. That's not going to be lost on clients," said Richard M. Alexander, managing partner at Arnold & Porter.
Alexander estimates that Arnold & Porter had between 30 and 40 lawyers who spent a significant portion of their time tracking and studying the legislation. More than 15 lawyers at WilmerHale were drawn from nearly every practice group to form an internal task force in anticipation of the overhaul, reports counsel Gail C. Bernstein and partner Thomas W. White. Dozens of attorneys at Skadden, Arps, Slate, Meagher & Flom published a 200-page tome on the impact of the Dodd-Frank Act before it was even signed into law, and the firm could eventually have as many as 100 lawyers involved in some aspect of the process.
"It will be difficult for firms without a history in these areas to build multidisciplinary teams," said Skadden partner William J. Sweet Jr., himself a former staff attorney at the Federal Reserve Board. "This legislation could really differentiate law firms."
Though the overhaul weighed in at more than 2,300 pages, experts estimate that only about a fourth of its provisions are set in stone. Even key details about some of its most significant provisions, including the newly created Consumer Financial Protection Bureau and the controversial Volcker Rule, were left largely up to regulatory agencies.
What will happen next largely depends on decisions made by regulators at places like the Fed, the Federal Deposit Insurance Corp., Treasury and the Securities and Exchange Commission, which Chairman Mary L. Shapiro said would need 800 more employees in order to carry out its expanded duties. Special interests at the ready to assist agencies in the decision-making process every step of the way.
"The lobbyists will find there is less public scrutiny, but they'll be dealing with people who have a better understanding of the issues," said Brookings Institution fellow Douglas Elliott. "The most effective way to lobby a regulator is different than the most effective way to lobby a member of Congress."
Congressional records show that industry groups have already begun building relationships with key regulators to provide the sort of analyses and data they might need. The Treasury Department was a focus of the Financial Services Roundtable, a group representing the interests of 100 of the largest financial services companies, in the second quarter when it spent more than $1.6 million on lobbying.
"We are fully aware that business has been out there for some time starting to act on what they want the rules to look like," said Nancy Zirkin, executive vice president of the Leadership Conference on Civil and Human Rights and the group's registered lobbyist. "We're going to stay in this fight because there is so much at stake."
Even once the details of the rules are hammered out -- which experts say is a process that could take two years or more -- the fight is likely to continue in the form of lawsuits challenging implementation of the law.
"I suspect there will be a lot of issues about authority, jurisdiction and scope that will find their way into the courts," Alexander said.