The world economy appears headed into a downturn, and—assuming that high inflation rates persist in a recession—may even face the first stagflation environment since the 1970s. As companies come under pressure to manage expenses and maintain cashflows, an inevitable cooling in client demand for transactional work from law firms will follow. This is cause for concern, as law firms are experiencing a reduction in corporate and deal work as well as increased costs, leading to a reduction in profits at many of the largest international law firms, according to research from the Thomson Reuters Institute. While billable hours declined by less than one percent in the last quarter, payroll expenses rose by almost 11% and overheads by almost 13%. Demand for M&A work for law firms fell almost 14% between July 2022 and September 2022 compared to the same period in 2021. And industry experts are already observing that 2023 demand is "concerningly weak." The consequences are already evident in layoffs by leading firms.