Tax policy, attorney fees and new federal rules for reporting contractor hiring information are likely to be hot legal topics in 2012.
Election years are known to be historically quieter for lobbyists, who often hold off until the last quarter — after the election of lawmakers — to get to work. But 2012 may be an exception, with the potential for corporate tax reform on the horizon.
The failure of the Joint Select Committee on Deficit Reduction, called the “supercommittee,” to agree on a debt reduction plan left unclear the fate of several tax provisions set to expire at the end of 2011 and 2012. As a result, lobbyists predict 2012 will be unusually busy. Many have begun forming internal tax committees, and will be jostling to add top talent to their tax groups.
“There will be a lot of work on tax reform,” said veteran lobbyist H. Stewart Van Scoyoc. “Next year is going to be a year where a lot of issues remain that need to be dealt with. As you move past the election, the first year of a new presidency is always the busiest time.”
Big law and their clients are increasingly open to alternative billing structures, according to an American Lawyer survey of leaders at top 200 firms. More than 90 percent of firm leaders surveyed said their firms used flat fees for at least one entire matter in 2011, and 82 percent used cap or “collars.” (Collars are when lawyers and clients agree on a flat fee; if the firm goes over that figure by a certain percentage, they’ll offer a discount on the difference.)
With more clients seeking discounts, 2012 may be the year law firms turn to contingency, flat, capped and blended fees — which averages billing rates for all attorneys working on a single matter — more than ever.
“Sophisticated clients are in some cases looking for different kinds of fee arrangements including volume discounts, greater predictability of pricing and risk sharing,” said Richard Alexander, managing partner of Arnold & Porter, where the billable hour remains the “predominant” way the firm charges clients. “These are things we confront all the time and we expect that trend to continue.”
Amy Wigmore, vice chairwoman of litigation at WilmerHale, which has long been an advocate of alternative fees, said the vast majority of the matters she handles — intellectual property litigation on behalf of large pharmaceutical and biotech companies — uses alternative fees, including flat fees and collars.
“Our clients are interested in these arrangements because it provides them with predictability as to what they’re going to have to pay each quarter,” she said. “We expect it’ll continue to be, perhaps increasingly so in 2012.”
The arm of the Labor Department that oversees federal contractors’ compliance with anti-discrimination laws is preparing to propose a new rule in 2012 that could require contractors to disclose more detailed pay information for its employees, including salaries, raises, bonuses and benefits. The rule, which would create a tool to collect pay data from contractors, is part of an effort by the Office of Federal Contract Compliance Programs to identify and weed out pay discrimination on the basis of sex, race, religion and other protected traits. The proposal has been in the works since 2010, and has drawn more than 7,800 comments from contractors, employer groups, pay equality advocates and others during a two-month public comment period between August and October. The regulation could affect a huge swath of the nation’s employers: government contractors employ nearly a quarter of the U.S. workforce, representing 200,000 businesses with contracts totaling $700 billion.
The OFFCP plans to publish a formal notice of the rule next year, after which there will be another public comment period.