• Capital markets and cryptocurrency legal work are expected to surge under a lighter regulatory environment.

• A shift in SEC priorities is likely to benefit investment fund formation and asset management practices.

• Law firms are preparing for increased lateral and associate hiring as deal flow accelerates.

Law firms are preparing for an influx of new work given that experts predict the U.S. Securities and Exchange Commission (SEC) will take a more relaxed approach under the new administration, according to a Law.com report.

SEC Chairman Gary Gensler announced recently that he will step down on January 20, coinciding with the inauguration of President-elect Donald Trump. 

• The announcement is widely seen as a precursor to significant changes at the agency, particularly in regulatory enforcement and oversight.

• Trump has not yet announced his nominee for SEC chair, but the anticipated policy shift is already prompting firms to position themselves strategically.

• A lighter regulatory touch could lead to an influx of transactional work for law firms, particularly in capital markets, private funds, and digital assets.

Crypto Finds a Friendlier Environment

Cryptocurrency is poised to benefit significantly from the new administration's policy shift. Trump has expressed support for digital assets, raising expectations for a more lenient regulatory stance on cryptocurrency issuers and asset managers.

A team of Ropes & Gray attorneys recently wrote in the Harvard Law School Forum on Corporate Governance that a less aggressive SEC could pave the way for broader adoption and investment in digital assets.

• During the Biden administration, the SEC pursued a stringent enforcement approach to cryptocurrencies, which many experts believe suppressed industry growth. 

• Alain Dermarkar of A&O Shearman predicts "a completely new, open crypto regulatory environment" under the incoming leadership, potentially fostering innovation and market expansion.

Capital Markets Set to Expand

Corporate finance practices at Am Law 100 firms are already bustling, and many anticipate even more activity. 

• Robin Wexler of recruiting firm Lateral Link notes an uptick in demand for legal talent in capital markets and finance as firms prepare for increased deal flow under a deregulated SEC.

• The relaxed approach is expected to reduce bank capitalization requirements, further stimulating debt and equity offerings. 

• Jesse Hyde, managing director at Lateral Link, described capital markets as "one of the busiest practice areas," a trend expected to continue in the near term.

Investment Funds on the Rise

Investment fund formation is another area likely to see growth. Hyde notes that fund-related work has been a steadily growing practice for decades, and reduced regulation could accelerate this trend further.

The demand for legal services in fund formation has risen consistently across administrations, but a lighter SEC touch could provide an additional boost, particularly for private equity and asset management clients navigating changing regulatory landscapes.

The Revolving Door of Talent

Presidential transitions often lead to significant personnel changes in government agencies. The new administration is expected to bring top SEC officials into private practice roles, bolstering Big Law firms with experienced regulatory talent.

Jan Folena of Stradley Ronon Stevens & Young, a former SEC enforcement official, emphasizes that while senior leadership may transition out, most agency staff will remain in place, adapting to new enforcement priorities rather than exiting the agency.