Tennessee is a national hub for healthcare matters and its strong mid-market industries ensure local firms hold their own in the face of competition from larger out-of-state rivals.
Chambers Associate: What are the current key industry sectors for lawyers in Tennessee?
Katie Stenberg: The key industry sectors are healthcare, hospitality/tourism, manufacturing (auto, in particular), payment systems, IT and agricultural.
CA: Which practice areas are currently thriving in the Tennessee legal market?
KS: Since COVID-19, labor & employment, healthcare (on the finance and operations-side, with a slowdown in M&A work) and finance and restructuring. Assuming a return to some level of normalcy we expect real estate and corporate work (including healthcare transactions) to thrive, especially in fast-growing areas like Middle Tennessee.
"Healthcare continues to strengthen since Middle Tennessee is home to many of the country’s largest for-profit healthcare providers."
CA: How has the Tennessee legal market evolved over the past five years?
KS: Middle Tennessee and Chattanooga have seen tremendous growth, thus driving real estate and hospitality practices. Healthcare continues to strengthen since Middle Tennessee is home to many of the country’s largest for-profit healthcare providers. Also, there’s been an influx in regional and global headquarters relocating to Tennessee (Bridgestone and Alliance Bernstein, for instance), largely due to its friendly tax policies (no personal income tax), and geography (strategically located in the middle of the country with great interstate access).
CA: How would you describe the competition between firms in the Tennessee legal market?
KS: In terms of competition, the legal market has been relatively hot over the past two to three years, with larger out-of-state law firms considering moves to Middle Tennessee. One thing that seems to insulate the areas from larger out-of-state firms coming into the area is that most of the practices focus on the middle-market industry which thrives in Tennessee, making it difficult for some of the nation’s larger firms to operate in Tennessee profitably. Among local firms, there has been significant growth and competition for good talent. Middle Tennessee, in particular, has been an attractive relocation option for people wanting to leave big-market cities, allowing for a slightly slower work pace, while still allowing for fairly sophisticated practices servicing some of the larger companies which are headquartered in the area and healthcare-related companies (i.e., including finance providers) across the country.
"One thing that seems to insulate the areas from larger out-of-state firms coming into the area is that most of the practices focus on the middle-market industry which thrives in Tennessee, making it difficult for some of the nation’s larger firms to operate in Tennessee profitably."
CA: What do you think the Tennessee legal market will look like in five years’ time?
KS: The legal market will certainly continue to be more competitive, with larger national and regional law firms having made inroads to the area, but the larger local firms holding their own because of the middle market issue discussed previously.
CA: What effects do you think Covid-19 will have on the Tennessee legal marketplace in both the short and long term?
KS: In the short term, we expect that COVID-19 will stunt growth and retail/hospitality industries. We believe that the healthcare industry will remain relatively hot despite the likelihood that we will see fewer transactions in the short-term as everyone shakes off the effects of shutting down. Long-term, we expect things to heat back up: we don’t see the metrics changing for why Tennessee is a good option for relocation, so we foresee continued growth of corporate clients and in the real estate area. It will be interesting to see how the hospitality industry weathers this. Nashville could be a good option since it is within driving distance for many people and relatively inexpensive for vacations, although some folks may debate that given the recent surge in hotel pricing (at least pre-COVID). On the other hand, much of its attraction (bars/live music) will not be social distancing-friendly.
"The legal market will certainly continue to be more competitive, with larger national and regional law firms having made inroads to the area, but the larger local firms holding their own because of the middle market issue discussed previously."
CA: What distinguishes the Tennessee market in comparison to other US legal markets?
KS: Tennessee continues to be distinguished from other U.S. legal markets by its overall growth rate (which continues to be robust), its attractiveness as a relocation option for large companies, and its attractiveness to lateral and entering market legal talent because it continues to be viewed as having good work pace, solid sophisticated work, and relatively low cost of living with nice amenities--professional sporting events, good restaurants, vibrant cities.
CA: What do you think are the main pull factors to the Tennessee market for law students and lateral talent?
KS: In short, you can have a sophisticated practice in a fun place without some of the commonly viewed downsides of larger legal markets.
