41 minute read
Professional Services
Professional
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From accountants to lawyers, the professional services segment of the economy has undergone unexpected changes in the past year. But the pandemic that decimated some sectors has been a boon for these services, underpinned by Charlotte’s strength as a financial capital.
Vital role:
The professional services sector has played a key part in supporting individuals and businesses throughout the pandemic
Breakneck economic growth over the past decade has given Charlotte a robust professional services sector. Given what is, in terms of assets, the second-largest banking center in the United States, as well as being a magnet for corporations seeking to relocate, there is a great deal of demand on hand to occupy a diverse set of these services. Accounting, financial advising, insurance, legal and private equity all play a vital role in the vast spectrum of business being done in Charlotte.
Although the COVID-19 pandemic upended many of the norms in these sectors, accountants and law firms were among those kept busy with the economic fallout as well as the monumental stimulus measures taken by both the federal and state governments to keep the cogs of the economy moving. Financial advisers, wealth managers and private equity groups were quick to see the multitudinous opportunities at hand. On top of a landscape irrevocably altered for its clients, the professional services themselves had to adapt to the new norm. These sectors were less affected by the move to remote working than others have been, and, indeed, investment in IT systems paid off handsomely for those that had made the move toward digital transformation. Landscape Charlotte’s economic rebound since COVID-19 knocked the bottom out of the economy in March 2020 has been impressive. Many performance indicators show that the economy is again growing robustly, with new deals and renewed interest abounding. This all bodes well for the professional services — financial, accounting and legal, among them — that depend on vibrant economic activity for their own success. Indeed, Charlotte’s relatively painless recovery has solidified its place as a boomtown for the times, a city and a region that — thanks to an ideal geographic location in the East, excellent schools providing skilled labor, and a less oppressive system of taxation — has been attracting businesses from around the country and reporting strong growth numbers.
Just prior to the pandemic, the Economic Development Partnership of North Carolina (EDPNC) reported that 2019 was the state’s best year yet, when Forbes ranked it as the third-fastest growing big city in the United States. In that year alone, the EDPNC was able to help steer 21,600 new jobs to North Carolina through corporate relocations and expansions. Now, the same body is preparing for a post-COVID economy, ( )
Ticking the boxes
Promising economy, airport proximity and quality of life are the determining factors in headquarters decision
Matt Snow
CEO – Dixon Hughes Goodman LLP (DHG)
Why did DHG pick Charlotte for its headquarters? We are the largest professional services firm headquartered in Charlotte and in the greater Southeast region, which is something we are really proud of. We chose Charlotte for many reasons, including the promising economy and business environment, proximity to a major airport and great quality of life. These are three factors we consider when expanding into any new market and were especially important when deciding where to put our headquarters. Charlotte has been great to DHG and we are very optimistic about the future of this area – between the strong talent pool and vibrant economic development – the future continues to look bright. We are very fortunate to call Charlotte home.
How did you help businesses navigate the CARES Act? We needed to help our clients understand the different provisions of the CARES Act. We had to do this quickly but we also wanted it to be consistent, innovative and thoughtful, efficient and properly risk-controlled. We quickly built a command center, as part of the DHG Solutions Lab, to centralize the CARES Act knowledge distribution. Although never contemplating a global pandemic, a few years ago we created the Solutions Lab, which focuses on the incubation, development and deployment of high value, relevant solutions for clients in today’s rapidly changing business environment to handle the new and emerging issues they face. The Solutions Lab is responsible for digesting the constantly evolving regulations, educating our team and getting materials out to our clients. They listened closely to our teams and our clients and identified new opportunities to help our clients understand the CARES Act.
How is the firm involved in the community, particularly in terms of inclusion and diversity? Shortly after we went into full virtual mode, the country began to witness a number of difficult events involving racial injustice. The death of Ahmaud Arbery really hit me, as a Georgia native, followed so quickly by the death of George Floyd and others. We quickly knew that the country was in crisis, and many of our team members were reeling from what they had witnessed and, as we would learn from many, from a lifetime of feeling marginalized. As a firm, we started incorporating discussions about race and inequality into our weekly and biweekly conversations within the firm. We hosted a session called “My Experience: Black in America,” to hear from DHG teammates about what it is like to be Black in America and at DHG. More than 1,600 individuals joined the session and asked more than 100 questions to learn and broaden their perspectives.
Malcomb Coley
Central Region EY Private Leader & Charlotte Managing Partner EY
What are the toughest challenges for the business sector a year into the pandemic?
The toughest challenge is the human element of engaging people. We learned we can operate well in a remote setting, but we’re challenged with finding a replacement for being in the o ce and just haphazardly running into one of your colleagues or, at the spur of the moment, going to see one of your clients face to face. That is the key piece where creativity and innovation is required.
EY opened a wavespace and design studio in 2020 in Charlotte. What progress has been made?
We were really excited when we inaugurated the wavespace and studio in January 2020 up until the pandemic hit. Since then, we’ve been doing virtual wavespace design sessions where we work with clients, the community and others on how to come up with digital, transformative, creative solutions to solve complex problems. The studio is centered on some of the most critical issues our clients in the community are facing. Using digital technologies, emerging technologies and innovation, we try to help them solve those complex problems. It encompasses all the disruptive technologies poised to profoundly change the world as we know it: automation, robotics, AI and blockchain. It combines digital with those transformative technologies to help companies become more creative.
What are the main priorities or goals for EY over the next year?
First, the vaccine rollout is extremely important, while at the same time we need to make sure people don’t let their guard down regarding the importance of social distancing, wearing your mask and washing hands. We must keep our guard up and ensure we keep everybody safe and healthy so that we can get back to some normalcy. Before then, we have to defeat this virus. Once we do that, we can have a healthy and thriving economy. ( ) and, as of last summer, it had nearly 40,000 jobs in the pipeline, 122 business recruitment deals and 45 regional investments. Though the number of deals is less robust than before the pandemic, it is not a hugely significant decline: about 70% to 80% of what had been transpiring in the same months in 2019. Additionally, this is a number due to increase as the vaccination rollout continues apace and further steps are taken to control the virus.
While the pandemic has been especially challenging for small businesses, Charlotte has been less severely affected than other parts of the country. According to a study by SmartAsset, a fintech company, Charlotte ranks fifth in the nation in terms of small-business optimism: 26.6% of small businesses are looking to hire new employees, 32.3% are operating at normal levels, and while only 24% reported having at least three months’ worth of cash on hand, it had the smallest percentage of businesses in the country — 39.6% — that didn’t foresee returning to operating levels after the next six months.
The professional services sector has been key in guiding business owners through the pandemic-related challenges.
Stuart Goldstein
Managing Partner, Charlotte Office – Cadwalader, Wickersham & Taft LLP
We were all taken by surprise by how quickly we all adjusted to virtual meetings and how well Zoom technology has met our needs to stay connected with our clients and our teams. And, yes, we’ve all met our clients’ and colleagues’ young children and pets, and I think some of those “interactions” really helped break the ice and added some reality in what was a tense period for everyone. So Zoom is here to stay, and I would expect that this technology will get even better in the months and years to come.
But we, like many others, are in a client service business. If our clients need to see us or if we think it is best for our clients for everyone to brainstorm in a room together, that is exactly what we will do. Business travel will come back but, like anything else, it will change. Client relationships are built on trust and confidence, and there really is no substitute for in-person interactions.
As businesses get back to work, expand or arrive in Charlotte, they are facing a new landscape in which COVID has in many ways changed the lay of the land. This is especially true of the professional services sector. Traditionally, such companies were very much tied to office space. As offices have become unfeasible in the climate of the pandemic, they have proven resilient in the move to remote work. Often these professional services are more suited to remote, and the spring of 2020 saw a rapid transition to at-home work. Companies have had to invest in updating their IT infrastructures accordingly. Even still, the shift has its limitations — some work is best done in groups and face-to-face meetings — and many offices that maintained a barebones staff throughout the duration are already looking at ways to bring people back. To this end, a move towards proactive cleaning, in which an office space undergoes more common deep cleans is becoming more common as a way of staying ahead of the virus.
The pandemic has also led firms to reassess their approaches to nonfinancial risk, chief among these being cybersecurity, the strength of third parties and vendors, and regulatory compliance. Managing cybersecurity risks has become more difficult as people move to at-home work and office systems become more thinly spread. Part of the problem, experts point out, is that cybersecurity is often overseen by a technical staff while fraud specialists — who focus on reducing loss — are treated as a separate
Clark Goodman
Charlotte Office Managing Partner Womble Bond Dickinson (US) LLP
Which of your practices or services have seen the most growth over the past year?
What’s really changed in terms of the demand for our practices and services has been driven by the changing circumstances of our clients. Initially, when the world went into a remote work mode, there was some slowdown in some areas, as everyone waited to see what the world was going to look like. We saw a shift in terms of the demand in certain areas. For example, where real estate development attorneys may have been focused on specific construction projects or financing, suddenly those projects were put on the back burner, while they turned their attention to working with commercial landlords, who were dealing with requests from tenants to negotiate modifications to leases, planning for potential defaults.
How is the firm deploying technology to adapt to the new environment?
We’ve become so conditioned to these video conferences that even some communications that would have taken place over the phone before are now done via video. We’ve increased our face-to-face interaction, in a virtual sense. We’ve found ways to convene meetings with other parties and to proceed with litigation or meditations or scheduling conflicts.
There are also some benefits on the e ciency side. There are cost savings, obviously, if you don’t have to travel and spend the time and the cost of being in other locations. I think there’ll be some long-term benefits as well, in that there could be an adjustment in the marketplace in terms of the need for physical space and sta ng across o ces. We now know that we can work across geographic boundaries to be more e cient, and there’ll probably be some adjustments regarding the use of space. We also employ some artificial intelligence. If we have a project with a large number of documents, like a contract review, rather than hire someone to review those manually, we have AI that can do that at a fraction of the cost. entity. Therefore, risk experts are not working with the people making business decisions; the dots are not being connected between threats, whether they be financial or nonfinancial, and the defensive strategies of companies are not correspondingly adequate. Risk managers should have a bigger role in nonfinancial decisions, and they are hoping that the COVID-19 pandemic has been the sort of disruption that might catalyze this kind of change.
The professional services industries have also had to navigate stimulus measures taken by the federal government to combat COVID-19’s effect on the economy. Most notably, the Coronavirus Aid, Relief, and Economic Security (CARES) Act injected $2.2 trillion into the economy in 2020. For small businesses, this was distributed in the form of loans through the Paycheck Protection Program (PPP). By July 2020, according to the US Small Business Administration,
119,981 small businesses had received $12.4 billion in PPP loans; 50,971 businesses had received nearly $3 billion in Economic Injury Disaster Loans (EIDL); and, through the EIDL Advance program, $348 million was granted to 106,000 North Carolina businesses that does not have to be repaid.
Many rules in diverse sectors were affected in an effort to stave off economic catastrophe. Both legally and operationally, professional services were profoundly affected, and much effort on their part over the course of the year has gone into navigating these new protocols, especially on behalf of clients who have been unclear regarding the shifting winds from the stimulus.
In the United States, professional services generate about $2 trillion in combined revenue (2018), according to SelectUSA. In 2018, the sector provides 9.4 million jobs nationwide. North America is the ( )
The BB&T-SunTrust merger brought an additional $442 billion in assets to Charlotte for a total $2.7 trillion held by its banks
Tom Gibson
President & CEO DecisionPathHR
We continue to look at technology to make us more e cient. The more that we embrace technology, the more time we have to spend with our clients. So we’re not pushing them totally to a tool and having them do everything online, but once we get all of the paperwork done, it allows us to spend more one-onone time together. I find it better all around for our customer service to have that technology in place. It benefits us and our clients that much more.
From the application process to all of the forms, backgrounds, tax documents — the only thing we can’t do virtually is drug testing. Otherwise, the technology performs any onboarding process that we have to conform to for the federal government and that we do to make sure we’re getting our client what they need in an employee. Plus, more and more of our clients are hiring people full time. Forty percent of the people who come through our door are hired full time.
I think there’s a global trend toward more contingency search. Ten years ago, if we were considering VP level engagement for any client, very rarely would we entertain it on a contingency basis. Now, we’re seeing it more and more. We are called PeopleSuite based on our rationale of wanting to o er a suite of people-related services to our clients. Most firms specialize: they’re either a retained search firm, or they’re a contingency firm, or they’re contract sta ng. We believe that we can execute each of these strategies extremely well and meet our clients where they need us. We’re also seeing technology have a major impact on the identification of available talent in the marketplace. We have artificial intelligence capabilities within the tools we use to help us find and connect with potential candidates. These allow us to identify people that clients can’t find on their own. It’s extraordinarily powerful.
David Preston
Co-Founder & CEO PeopleSuite
Jay Wade
CEO Wade Associates, LLC
Looking back at the SARS breakout, the insurance industry had to react to that. Insurance companies put wording into their policies that would exclude how those policies would react to pandemics or virus outbreaks, essentially saying that in the event of a shutdown, such as what happened with COVID, the business interruption policies were not going to respond. Those policies have now been tested in many court cases. There have been a few where the courts declared that those policies were not explicit, not ironclad in their exclusion, so they allowed these cases to go forward. For the business owners who were in dire need of that, it was a good thing. As far as the insurance industry is concerned, they were not equipped from a monetary standpoint to deal with the types of claims that might come up as a result of this pandemic. We’ve yet to see the finish line on this but it would have a very big impact on the insurance industry’s ability to respond to the things that they do underwrite and prepare for, such as the fires, catastrophic windstorms and hurricanes that happen all the time. We’ve yet to see how that’s finally going to pan out.
( ) largest region for the sector, accounting for 37% of the global professional services market,
Financial center Charlotte has a lot recommending it as a regional financial center. With $2.3 trillion held in its banks, the city is the second-largest banking center in the United States. According to the Charlotte Regional Business Alliance (CRBA), another $442 billion in banking assets came to the region with the merger of SunTrust Bank and BB&T to be added, increasing the total assets by 20% to $2.7 trillion. The merger was completed at the end of 2019 to create Truist.
Led by major institutions that are headquartered in the region, such as Bank of America and Truist, the city is a major destination for corporations. With its 2.5% effective corporate tax rate, many financial companies are realizing that they can get a better deal there than in the traditional centers of New York City and Chicago. Encouraging this economic growth is Charlotte’s booming population, which has grown by 15.2% since 2010.
The city is well-positioned in the heart of the Southeast while also being in the center of a square of powerhouses that are on the region’s fringe: Texas, Florida, the Middle West and the Washington-New York-Boston Northeastern corridor. It is also attracting the youth of the state’s many top schools, is increasingly diverse, and has a booming restaurant scene as well as many entertainment offerings (including three major league sports teams). The price of homes, while rising, remains relatively affordable.
With these offerings, the roster of financial industries homing in on Charlotte is diverse; it includes fintech companies, financial service companies (wealth managers, banking and investment services), company headquarters, incubators, investors, venture capital and corporate finance firms, and energy firms. If the pandemic has a silver lining for Charlotte, it is that it has accelerated this trend. People have realized that not everyone needs to go into an office in a major metropolitan area. They are also less partial to living in very densely populated areas. Charlotte scores well on both these counts: it is not as dense as Manhattan and it has much of the highly skilled talent necessary for an advanced financial company without having an absolute glut of such workers. The CRBA is keen to take advantage of this unique moment in the city’s history, and is working on incentivizing businesses to come, focusing especially on fintech and entrepreneurship.
Charlotte’s reputation as the second-largest banking hub continuously fuels the growth of the professional services industry as the region’s economy diversifies further.
It’s been a busy year for accountants, a sector whose growth tends to reflect expansion in the economy at large. This, though, is a mirroring which goes both ways, and as businesses struggle, must accounting firms are there to help them survive. The pandemic, and its economic fallout, brought them plenty of business. A raft of new rules from the government, PPP loans, tax planning, tax credits, solidifying shaky business financials and navigating safety mandates were all among the help that Charlotte’s business community required of its accounting firms. On top of this, the accountants themselves had to transition their operations into pandemic mode, learning the ins-and-outs of the government’s new rules even as they moved to remote work. Some of the bigger firms, such as PricewaterhouseCoopers (PwC) stand out here. Already invested heavily in a digital strategy prior to
the pandemic, they were able to nimbly make the transition, but not everyone is endowed with that kind of reserve.
Charlotte’s accounting sector is fairly diverse. Not only does it have the big, international players, there is also room, and enough small businesses, to provide fertile ground for the boutique firms. The three largest accounting firms with offices in Charlotte are, in order, Ernst & Young, Deloitte, and PwC; though, while EY has more professionals, PwC has the most CPAs of any firm in the city (393). Boutique firms, though perhaps without the resources that the giants have, can make up for size with customization of services and by being more adaptable to the needs of their clients. One CPA at the small firm Fisher, P.A. noted that, in addition to offering accounting services, tax compliance and business advising, clients can even outsource controller services or hire them to serve as chief financial officers.
In addition to the pandemic stimulus money, new rules were enacted to help people under lockdown, which had an effect on accounting. One of the most immediately relevant was the North Carolina Department of Revenue extending its filing deadline for North Carolina individual income, corporate income, and franchise taxes from its usual April 15 to July 15. There have also been similarly temporary rules put in for people seeking unemployment relief: for a year, starting in March 2020, people receiving benefits did not have to prove they were seeking work. This waiver expired in March 2021.
North Carolina has quietly emerged as a national leader in the field of financial advising. In Charlotte itself, SmartAsset has ranked financial advisers, ( )
Steve Meckler
Charlotte Managing Partner – Shumaker Loop & Kendrick
We were fortunate to be well-prepared for remote working. Our firm’s footprint includes o ces in Charleston, Tampa and Sarasota so we have a contingency plan in place for hurricanes. It put us in a good spot to undertake a seamless transition to continue working remotely. We sent equipment home with secretaries and sta while all attorneys have laptops they can take. Our remote VPN capabilities are great, and we also use digital dictation equipment. The legal community overall has done well and we did not miss a beat.
People decisions
During the pandemic, companies focused on their talent rather than their budgets
How would you evaluate 2020? Signature is a national IT staffing company and the largest in Charlotte. In 2020, we came out of the gates very similar to 2019 but then the pandemic hit and for the third and fourth quarters we were forecasting a 30-40% drop in activity. To the benefit of our clients, companies made people decisions first and budgetary decisions second. In Q2, demand was down about 28% and in the third and fourth quarters, levels were down about 14% and 4%, respectively. For the year, we will be about 5% up in revenue. We work with all types of companies of all sizes and we have a split of about 43% technical placements and around 57% nontechnical. In terms of industries, banking and healthcare were very active but transportation and travel and tourism were down substantially. Tech companies were very much booming this year, and tech-related roles were high in demand. We expect to see a bullish return to travel and tourism as we enter 2021.
What are some of the tech areas that were bolstered in 2020? Cybersecurity demand has been off the charts. All the efforts and initiatives from our customers are on digital transformation and infrastructure. We do not see that demand slowing down. Our company has six business lines. One of our divisions, Signature Federal, holds clearance and does a tremendous amount of work in federal cybersecurity, and there is a lot happening in this space. Charlotte’s cost of living, the substantial numbers of employers that deploy new technology, the youth and the innovative climate are all factors that attract people to the region. Fintech has been huge in Charlotte, with the Lowe’s technology center in SouthEnd and Honeywell relocating its headquarters to the city. These and many other factors have made the city a very attractive location for tech professionals.
What are some of the other challenges created by the pandemic? I think everyone is talking about onboarding and training of new hires in the virtual world. We hire a few hundred internal employees per year, and it is much more difficult to do it virtually. Still, we see companies figuring out how to make it work. Generally, it’s more difficult to build long-term relationships over Zoom. In our business, because face-to-face relationships are essential, that has been a challenge. It’s tough for any business to navigate this situation. We’re waiting to see what our customers want to do, and also trying new tactics and learning along the way. At this point, we do not see any desire to return on a large-scale until the second half of 2021.
Geoff Gray
Executive Vice President, Southeast Region – Signature Consultants
Tech-savvy talent has been a rising demand for businesses across di erent industries.
( ) and the Top 8 in the city are managing over $500 million each. The top, Carroll Financial Associates, Inc., manages nearly $3.5 billion; the next two on the list are Bragg Financial Advisors, Inc. and Colony Family Offices, LLC. Both manage about $1.7 billion.
The past year has been an eventful one, to say the least, and financial advisers, their keen eyes following the market, have been rewarded by paying close attention. Firms with a background in the medical sector were able to protect themselves against major losses when the bottom fell out. Since then, as the triumph of the vaccine has become the biggest success story of the year, the science sector is regarded by some wealth managers as having a resilience that will pay dividends moving forward. As a direct result of the COVID-19 pandemic, both housing and e-commerce are other areas expected to be reliable drivers of market growth in the near term.
Another trend in financial advising that is emerging out of Charlotte pertains to retirement planning. The Retirement Clearinghouse is a company based here that has developed technology for retirement plan sponsors that allows employees to transfer their retirement savings without having to manually cash out of their account. This technology aims to benefit Black and Hispanic individuals since they disproportionately cash out of their 401(k) accounts when they switch jobs, making it more difficult to accumulate savings for retirement. The company is growing and says that it will add 300 jobs to the Charlotte area in the next four years.
For the insurance industry, the landscape as a result of the pandemic has been altered in a number of ways. Most immediately, there was the loss of employerbased health coverage for millions of people who became unemployed as a result of the pandemic. People are hopeful that with the Biden administration backing the Affordable Care Act and federal stimulus money attending to the problem, the bleeding might be staid.
New trends in the insurance business itself can be seen as a direct result of the pandemic. After the SARS outbreak in 2003, many insurance companies began looking into the necessity of pandemic insurance. This trend has only accelerated, with one provider saying that pandemic insurance is fast becoming as prevalent as terrorism insurance became after 9/11. Another area affected over the course of the pandemic has been cyber insurance. As cybercriminals have become emboldened and opportunistic over 2020, more companies (65% of SMEs, according to one count) are spending more on cyber insurance.
Walter Fisher
Office Managing Partner, Charlotte Troutman Pepper Hamilton Sanders LLP
How have client relationships been affected by the pandemic?
During this pandemic, the ways in which we build and maintain relationships have varied from client to client. Some clients are very cautious about any in-person contact, but we also have others who are craving human interaction, seeking to meet in safe, socially-distanced environments. It’s been a matter of discerning in a diplomatic way what clients are interested in, and what they’re not interested in. However, I have used Zoom and other virtual meeting formats extensively during the pandemic, and most of the clients I work with have welcomed the use of such tools.
How difficult has it been to train young talent in a pandemic environment?
Nurturing, developing, and retaining talent is more challenging than finding and hiring talent, and that was true even before the pandemic. The pandemic has only introduced additional stress in this context. While talent recruitment always is hyper-competitive, the larger challenge is making sure the environment and training provided to young attorneys meet their requirements for professional growth and advancement to connect them to the firm and its future.
We are focused heavily on ongoing training for our attorneys and paralegals, and e ective training has been more di cult in the remote environment. Historically, much of what our associates learn they pick up while physically in the room with more senior attorneys on a conference call or in a meeting. Being able to place a legal document in front of you and explain why you made the changes you made is important to the learning process for young lawyers. We’ve had to adapt in this area, and I believe we have done so successfully for the most part. We’ve conducted Zoom meetings with associates to plan for client calls or talk about documents they’ve drafted, and I believe the use of virtual meetings has been instrumental in keeping the dots connected and advancing the learning process.
But there are also legal issues that arose for the industry pertaining to liability as a result of the pandemic. As businesses closed, they went to their insurers to stake their claims. But many insurers argue that the pandemic caused no physical damage, negating the obligation to pay out. The issue is in front of the courts in many states and the outcome could have far-reaching implications for the industry and their clients.
Legal The legal industry, not unlike accounting, has been hit with a very busy year even as they’ve had to navigate their own evolution, from creating a safer office environment to establishing decentralized work-athome protocols. In many cases, the value of occupying significant amounts of office space has been called into question. Trial work stopped for three months at the height of the spring lockdown. Along with much of a lawyer’s work, the courts were able to resume as the profession figured out remote work. Still, there are aspects of the job that are disadvantaged by speaking into a camera. Trial lawyers will attempt to read the jury to better persuade them, and when taking a deposition, much can be discerned by the body language of the witness.
In these respects, lawyers are keen to return to the status quo. But in others, this is not the case. Trials are less expensive and time-consuming, particularly when it comes to calling third-party witnesses, if done over Zoom.
In general, the digital strategies of law firms have been forced into the future, and not only in the trial sense. Digital marketing has fast become the norm for firms that used to advertise their services in-person at events. Firms that had already adopted a cloud-
The three largest law firms in the region are Moore & Van Allen, McGuire Woods and Robinson Bradshaw
The re-evaluation of o ce space after COVID will be a key factor for professional service firms post-recovery.
based model before the pandemic benefited by not having to overstrain themselves when the virus struck. Generally speaking, the shift to remote work did not adversely affect the amount of attention law firms can pay to their clients. In certain respects, the pandemic has forever changed how firms conduct business, with many predicting that in-person closings for home purchases are a thing of the past. Also, law firms have had to be creative in how they recruit and train new attorneys.
On the whole, Charlotte’s law firms were busy over the course of 2020 and saw a growth commensurate with that state of affairs. Attracted by the city’s status as a commercial hub, not least, the fact that it is the second-largest U.S. banking center, the region has become a magnet for law firms. The three largest firms in the region are: Moore & Van Allen, with 310 attorneys; McGuireWoods, with 164; and Robinson Bradshaw, with 134.
While North Carolina is increasingly an attractive destination for outside talent, the pool locally is considerable too, and the top three law schools in the state — Duke, UNC Chapel Hill and Wake Forest — are renowned nationally. ( )
Perspectives: Outlook 2021
Clayton Curry
Management Team – Offit Kurman We think that we’ve adapted and that there will be more opportunities because of that, providing new legal services to existing clients, finding new clients and generally growing our firm. With regard to new opportunities, now that we know how to work remotely, there are things that we can do with clients that maybe in the past we would have had to wait until a physical meeting occurred.
Nathan Hull
President & Founding Partner – Hull & Chandler, P.A. A lot of my clients are concerned about taxes related to business transactions, such as capital gains. The reality is that it is probably not as big an issue as long as there is proper planning. Every time an administration changes, there are changes in the tax code and this is not always just confined to the rates. Until these things are determined, everyone’s a little on edge.
George Miller
Partner – Dozier Miller Law Group Our outlook is full-speed ahead growth. We’re excited for where the firm is and where we’re going. Like everybody out there, when 2020 began, we were concerned about the year and what was going to happen. We were thrilled we had no layo s, cutbacks or salary reductions. We haven’t slowed down and had a good start to 2021.
Mark Riopel
Co-Managing Partner – Hamilton Stephens Steele + Martin PLLC My outlook for the Charlotte region is quite bright. Whatever happens with the economy nationally, we will be on the higher side. We’re a growing city, so that will help. I can’t look into a crystal ball but I know that things look good in the practice area that we’re in. We do a fair amount of construction and bankruptcy litigation.
Marty White
Managing Partner – Johnston Allison & Hord We expect a big uptick in litigation once the courts are able to open consistently and get trials going. The unknown is when we can reliably expect to get back into the court. We anticipate that will take place in the latter half of 2021. The other big growth area we are looking at is bankruptcy because many sectors of the economy have been a ected by the pandemic.
®oundtable:
Pandemic maneuvers
Accounting firms found themselves in the thick of the pandemic as businesses scrambled to deal with a rapidly emerging and changing regulatory and stimulus landscape. Leaders discuss their areas of focus during this tumultuous time.
John Bly
Regional Managing Partner, South Atlantic Aprio LLP
What has been your focus during the pandemic? In terms of clients and our external focus, we couldn’t stop the train after it went out, with PPP, tax law changes and April 15 to July 15 deadlines. All of that became a freight train as we tried to help clients make sure they managed to find funding through the PPP process, to figure out the new tax credits that were out there and also provide real advisory regarding what’s happening with the economy, with their businesses. We had to pick up the phone and have conversation after conversation on how to deal with human resources issues, and remote working.
How did deal activity evolve during the pandemic? In Mid-March, we had a handful of clients and deals that were close to being done and I can remember having a conversation with someone on March 15, and they basically were putting deals to the side. There were enough changes in the stock market that people were starting to get nervous. Deals dried up completely until really about the Fourth of July, and then it seemed like things started to loosen up as people realized that this was going to be the reality for longer than they thought.
Where is the business of accounting headed? I think we’ve been in an ongoing battle between compliance and advisory for the last handful of years. Firms that haven’t been able to move into more advisoryoriented roles, providing more business and technology consulting and having less to do with tax code and compliance, could feel even more pain coming out of the pandemic.
John Norman
Managing Partner GreerWalker LLP
How did you approach your work with clients in the new landscape that emerged in 2020? We have a long-standing tradition of positioning ourselves as the most trusted business adviser in the market. The situation most of our clients were in allowed us to step up our game. Multiple conversations with our clients were deeply emotional and personal in finding a new pathway through this uncertainty made up of big unknowns. We helped them through critical economic and personal decisions about their business. Tough decisions had to be made. It went beyond tax, beyond accounting; it was about making business decisions that a ected people’s lives.
How has demand for your service areas evolved? One of our services relates to investment banking. What was very clear at the outset of the pandemic was that there was not going to be any investment banking going on starting March 16 and up until an unknown date in the future. We worked with our investment banking team and turned it into a PPP loan task force. Our investment banking side went down because it just went full stop. Our due diligence practice slowed down a bit. Because of the CARES Act and so many things within it being related to tax, our tax advisory services grew.
What regulatory factors are your clients watching? The No. 1 driver and No. 1 question from all our clients is what is going to happen to tax rates, and the potential for retroactivity. That is our top focus. We don’t have a crystal ball, but based on our long-standing experience, there is unlikely to be major tax legislation in 2021.
Dan Warren
Charlotte Market Leader Elliott Davis
Which among your service areas witnessed a demand surge? We have a cybersecurity group that is in high demand. We are fortunate we had them in place before all this started. It quickly became the hot topic as companies went remote. Another group that remained busy is our valuation team. They saw increased demand fueled by possible upcoming changes in lifetime gift and estate tax exemption amounts. A lot of people were in a rush before the end of the year in terms of gifting because of this. That required valuations of their businesses so they could give as much as possible and we are still busy in this area. We also dedicated a significant portion of our talent and resources toward assistance with PPP loans and other available stimulus credits to both clients and prospects. They were able to capitalize on our use of data and AI to help them drive business decisions as well.
How do you see technology taking the accounting sector to the next level? We’ve invested heavily in technology. We were already down the path we needed to be on. There’s so much more virtual work now, and we try to make it seamless for our clients. There is no going back, it will continue to grow. You must use the right tools to adapt. Technology has definitely helped us do that. CPA and accounting services have historically been a relationship business. That is how we built our firm. The pandemic has made that a lot tougher, and it will be interesting to see how we transition to new lead generation and client retention practices moving forward. It also generated significant expense savings as most internal travel is o the table for now. How did 2020 evolve for BDO? When the pandemic started in mid-March 2020, we were going through the busiest time of the year for our group. In October, our o ce was reopened at a reduced capacity. It has proven challenging from the standpoint of managing, promoting and developing our people. Staying connected with them was critical. We found that we have people who thrive in a work from home setting while others found it hard due to the lack of human interaction. Our client base is quite diverse. Some have reopened and others performed better than initially anticipated in a remote setting so they’re looking to make that more permanent. There are also those that were deemed essential and are doing well because of that.
How are you advising companies on the employee benefits side of the business? We have seen several elements put in place for our clients. Early on, the focus was on the cash conservation side, boiling down to either reducing bonus pools, temporary pay reductions or halting 401K matches, to name a few. As businesses gradually opened back up, there was some movement at the executive level among high-level finance executives. But for the most part, people are staying where they are at, while companies are looking to ensure talent retention. Meaningful programs revolve more around work-life balance. As people have delved into the working from home experience and companies are witnessing their e ciency either maintained or raised, companies are also intent on providing the required technology to their employees to ensure optimal working conditions across all levels.
Jeffrey Wilkinson
Office Managing Partner Assurance Services BDO – Charlotte
Rewarding year
Despite the challenges of 2020, McGuireWoods didn’t miss a beat
What were the highlights, milestones or takeaways in 2020? Looking back, 2020 was probably the most challenging and the most rewarding year in my 29 years of practicing law. For me, the biggest takeaway from 2020, was just how well we weathered the COVID storm. I was so pleased at the way our lawyers and staff in Charlotte, and around the firm, stepped up to meet the challenge. We took care of our clients’ needs and made sure to take care of each other. The following are just a few of the accomplishments that I am so proud of: our firm was recognized by Bank of America for our promotion of diversity and inclusion; 140 attorneys in our Charlotte office provided over 6,700 hours of pro bono legal services to the less fortunate in our community; and we started a number of initiatives to help all of our employees better understand the racial inequities in our local community and what we can all do to make things better.
What were some of the factors that drove your business during the COVID pandemic? We did have a very good year. I think that our ability to step up and meet our clients’ needs without missing a beat is what led to our success. To help our clients deal with a wide range of legal issues created by the COVID-19 pandemic, we set up a COVID-19 Response Team made up of lawyers from all of our practice groups and industry teams. We monitored federal and state legislation, regulations and executive orders to make sure our clients always had the most up to date information so they could make the most informed calls. Our COVID-19 Response Team met weekly to discuss COVID-related issues. I think that is what allowed us to have a phenomenal year. We became one of the firms nationally that was seen as a leader in identifying legal issues, whether it was the PPP process, the CARES Act, the Families First Coronavirus Response Act, or the changes and regulatory schemes that came about because of COVID.
What are the firm’s goals for 2021? We are very optimistic that we’re going to have a great 2021. I believe we have positioned ourselves well with new attorneys joining the firm and in the Charlotte office. Our growth is strategic and always driven by the needs of our clients. The areas of most interest in the Charlotte office are banking and financial service, healthcare, technology, debt finance, corporate, regulatory, employment and employee benefits. We see great opportunity to help our clients plan for and take advantage as the post-COVID recovery kicks in.
John McDonald
Managing Partner, Charlotte – McGuireWoods
The encompassing scope of the professional services sector will be key in the market’s recovery process.
( ) Keeping all these lawyers busy is a raft of coronavirus-related issues and litigation. Indeed, these are expected to keep the sector engaged for years to come. Lawyers have been able to offer advice on how companies can most safely return to the office as well as how the possibility of layoffs might be dealt with. Drinking establishment owners have been suing the state, demanding that their bar be allowed to reopen, and a millionaire even sued a shipbuilding company for having to delay the delivery of his $10 million yacht on account of the virus.
Private equity For private equity, Charlotte holds the title for having the highest number of firms in the state. They are drawn here for the same reasons that draw the other professional services: the vibrancy of the economy, buoyed by a huge banking sector, skilled labor and a desirable quality of life. As companies want to establish a presence in Charlotte, so too will private equity firms be here to support them, helping to create a symbiotic ecosystem that bodes well for the local economy.
New Republic Partners, a relatively new arrival to the Charlotte Private Equity scene, holds that the pandemic has only accelerated the massive movement of wealth to the Southeast. Charlotte, it says, is in a good central position for exploiting this trend, which is only aided by the availability of top talent. According to Crunchbase, the top three firms in the city are Advent International, Echo Health Ventures, and Temasek Holdings.
Looking ahead With the economy settling down and poised for growth as the year wears on, the professional services stand to benefit from continued growth in Charlotte. The city was in a strong place before the pandemic and continues to look strong coming out of it. Granted, the city, region and country are not yet in the clear, and there is still further to go as the vaccine is distributed and life opens up properly.
The world of professional services is altered. Ten years of digital transformation was packed into six months, and it is sectors such as these — office-bound cogs of the economy at large — which will surely be transformed by a revolutionary time.
Charlotte, though, remains strong. The greatest fears of spring 2020 have not come to pass. The region continues to attract the interest of business and individuals. One could even go so far as to say that Charlotte benefited from the pandemic, as many are now looking for a less dense but still vibrant locale to conduct their business.