The current financial crisis may be contracting legal job prospects, but looming regulatory changes may allow law students and new attorneys to squeeze some opportunities out of this lemon of a job market.
The current U.S. financial regulatory system is a collection of various regulatory codes enforced by an acronym-laden list of administrative agencies. The securities markets have the Securities Exchange Commission (SEC). The futures and options markets have the Commodity Futures Trading Commission (CFTC). The banking industry has numerous entities like the Treasury’s Office of the Comptroller of Currency (OCC) and Office of Thrift Supervision (OTS). These agencies often have jurisdictional overlap problems with each other and other agencies, and duplicative rules and enforcement efforts often cause headaches for the financial industry. The current regulatory arrangement is a patchwork creation put into effect at different times across multiple generations, and, in light of current events, many critics are calling for a modernized system.
This summer, Treasury Secretary Hank Paulson recommended a complete overhaul of the financial regulatory system. His plan would include short term steps like merging the SEC with CFTC and the OCC with the OTS, but the long-term goal would be scrapping everything in favor of a group of regulators that base jurisdiction not on market type as is the case right now, but instead based upon the purpose of the regulator. CFTC Acting Chairman Walter Lukken, while not supporting the short-term mergers, recently voiced his support for a similar overhaul. Lukken’s plan would create three new objectives-based regulatory agencies: a market integrity regulator, a systematic risk regulator, and an investor protection regulator. Each new regulator would have regulatory authority over all types of markets, providing flexibility and (hopefully) less duplicative regulation and fewer jurisdictional disputes.
Whether you believe that such an overhaul is a good plan or not, major regulatory overhaul could provide a huge opportunity for law students and new attorneys. Industries that have operated for years under the current regulatory scheme will need attorneys who understand the modified (and, potentially, entirely new) regulations. Additionally, industries that have traditionally been able to avoid regulatory scrutiny—the private investment fund industry as a major example—will have a huge need for attorneys who can help restructure operations and provide oversight in order to comply with new regulation. Finally, if new multi-industry financial regulators are created, these massive agencies will require huge staffs that comprehend a new system of regulation. All of these opportunities could be a boon for those that aren’t married to the old system of financial regulation and are willing to put in the effort to understand the complex new regulatory landscape. Law students and new attorneys are in a great position to do just this; they just have to stay informed and get ready to do some squeezing.