Law firms expect candidates to spot and analyse developments like this in applications and interviews. We cover how to do that and more stories in our Commercial Awareness hub.
- Partner-Only Law Firms
Pierson Ferdinand is a fully-remote law firm, founded in the US in 2024. This was the largest law firm launch to happen in the US, and only consisted of partners joining the firm.
How is this possible?
Pierson Ferdinand is a ‘tech-enabled’ law firm, which means more junior level staff like associates are replaced by generative AI tools like Harvey. This involves the completion of first drafts and more admin-heavy work like due diligence.
The biggest upside of this ultra-lean law firm model for fee-earners at the firm is financial. Due to the lack of overheads and labour costs, the firm is able to pay its partners very generously (even more so than places like Kirkland or Paul Weiss)
What does this mean for the business and competitors?
- Partners at Pierson Ferdinand will have to be highly capable at driving business relationships
- AI is being pushed to its maximum potential here - this is a good test case
- The law firm pay war will only be further accelerated by this development
- Other law firms will have to critically assess their business model on the basis of cost
- Federal Reserve Rate Cut
The US’ central bank, the Federal Reserve, has cut interest rates by 0.25% to 3.5 - 3.75%. Three of the twelve Fed official voters were against the cut, a substantial disagreement. Whilst the cut still went ahead, this represents the core tension between tackling a weak job market and high inflation.
In terms of how lower rates help with a weak job market, businesses are able to borrow more when they have to pay back in interest, which allows them to hire more people and expand. However, lower rates also means normal consumers spend more money as products like mortgages and credit cards become more accessible, which leads to greater inflation (known as demand-pull inflation).
Trump is a heavy critic of the Fed Chair - Jerome Powell - for being conservative with rate cuts. To Trump, more aggressive rate cuts (he wanted a 0.5% cut this time around) means a stronger economy. Stimulating economic growth in the short term is more politically preferable.
What are the implications of this rate cut?
- The price of shares and bonds experienced a strong upward movement following the rate cut
- Future rate cuts are unlikely in the short-term according to Powell
- Inflation in the US is going to fall at a slower rate due to this cut
- Consensus is fragile in the Federal Reserve, in light of the largest voting dissent since 2019
Knowing the story isn’t enough. In applications and interviews, firms expect you to explain why this matters commercially and how it affects clients. The Commercial Awareness Starter Pack shows you exactly how to do this using a simple, repeatable framework.
How to use this in applications
- In interviews, an increasingly common topic is that of the contrasting UK and US law firm business models. Bringing in this firm might allow for you to argue in favour of a UK-preferred approach which moves away from this sort of business model, or alternatively a US-preferred approach which is moving in this direction. Think about what value associates can bring that AI cannot.
- These rate cuts represent a 3-year low, so it is important to consider in your applications or interviews how low rates affect businesses. Similarly, consider whether rates will continue to fall (in line with Trump’s preference), or whether rates might instead rise again to meet other policy objectives like tackling a high inflation rate.
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