The Fed raised rates yesterday for the first time in over three years. Here's what I think that means for law firms, demand for legal work, and lawyer hiring in Miami over the next six months.

A quick history lesson, because this movie has played before. The last time the Fed was hiking aggressively, global M&A volumes fell to a decade low in 2023, down 18% to about $3 trillion, per Dealogic. Private equity buyout volume slumped 38%. New money loan issuance for deals dropped 47%.

And on the other side of the ledger: U.S. corporate bankruptcies hit 694 in 2024, the highest since 2010, per S&P Global. 2025 is pacing even higher, up 14% year over year through November. Every one of those filings is restructuring work.

Whenever a headline like this drops, I run it through three questions:

1. Does this make borrowing cheaper or more expensive?
2. Does that create more deals or more distress?
3. Which practice groups get busier, and which get quieter?

The causal chain is simple: when the Fed raises rates, borrowing money gets more expensive. When borrowing gets expensive, companies do fewer big leveraged deals. When deals dry up, corporate lawyers get quieter. But the same expensive money squeezes companies that are already loaded with debt, so more of them default, restructure, or file Chapter 11. And that keeps bankruptcy lawyers very busy.

A big law bankruptcy attorney I spoke with this week put it well: "it always takes a while before consumers feel rate hikes. People just keep buying until the floor drops out from under them."

That's the lag, and the lag is the opportunity.

So here's my read on where demand goes from here.

What should decline:

Corporate transactional work, especially anything leveraged. LBO financing volume fell off a cliff last cycle (2022 LBO loan volume was the second lowest in five years, per PitchBook). Expect fewer big-ticket M&A mandates, slower PE deal flow, and longer timelines on the deals that do happen. Real estate transactional work should cool too, since higher rates freeze both buyers and sellers. Capital markets will likely stay quiet.

What should increase:

Restructuring and bankruptcy, obviously. But the less obvious winner is the refinancing and amend-and-extend market. In 2023, institutional refinancing transactions surged 141% to $206 billion, and amend-and-extend deals hit a record $175.9 billion. Borrowers don’t refinance because they want to. They do it because the maturity wall is coming and the math changed. That work flows straight to finance and restructuring groups.

Distressed debt and special situations should pick up. Dividend recaps actually jumped 71% in the first eight months of 2023, because sponsors who couldn’t exit portfolio companies pulled cash out instead. And where there’s distress, commercial litigation follows: covenant disputes, lender liability fights, breach claims. Litigation boutiques with commercial chops should see a lift.

My opinion, based on the data: the firms that come out of this cycle strongest are the diversified ones. A corporate-heavy shop with no restructuring bench is going to feel this in a way that a full-service firm won’t. Bankruptcy groups go from cost centers to profit centers. And the lateral market follows the work, not the headlines, so watch where the restructuring partners are moving. That’s the tell.

What should this mean for associates?

On the corporate side, firms will likely get pickier. Midlevel M&A associates should expect offer timelines to stretch and lateral searches to slow. If you’re a corporate associate, your next move depends on where you sit.

If you’re at a firm with a solid corporate practice and your seat is secure, this may be the time to stay put. Be the associate who’s still standing when the market turns. The firm you jump to for a bigger title may not be standing as tall in eighteen months.

But if your firm’s corporate practice is already shaky, don’t wait for it to get shakier. Look now at firms with real balance sheet strength and diversified deal flow, because the strong shops will be the ones still hiring when everyone else freezes.

If you’re a litigator with any restructuring, bankruptcy, or commercial finance exposure, you should start positioning now, before the wave hits. The demand is coming. The only question is whether you’re visible when it arrives.

The firms that win the next lateral cycle will be the ones reading this cycle correctly, not the ones waiting for it to be obvious.

This is the stuff I track every day for Holtz & Bernard. If you want to talk about where your practice fits in the next six months, my door is open.