The numbers nobody planned for
The SEC's enforcement division closed fiscal 2025 with 456 actions, the lowest annual count in at least twenty years, on figures from Sidley and the Harvard corporate-governance forum. Its headcount fell about 15 percent through the first half of the current fiscal year, with the 2026 budget request held roughly flat near $2.149 billion against a footprint of about 4,100 people.
For a practice that spent the prior administration scaling up to meet what everyone treated as a permanent enforcement boom, those two numbers describe a reversal, not a soft landing. The 2021 through 2024 stretch pulled white-collar, SEC defense, and antitrust merger-review headcount higher at every firm with a serious regulatory bench. Most of that capacity now meets demand that showed up later than forecast, in different corners of the practice, and at lower volume.
Priorities moved, the work did not vanish
What happened inside the agencies was a redirection more than a cut. New leadership at the Justice Department shifted resources toward violent crime, narcotics, and immigration, and pulled them off some of the traditional white-collar lanes that fed law firms in the last cycle, as Cleary Gottlieb has tracked. The SEC traded broad rulemaking for narrower, more targeted enforcement. The FTC's draft strategic plan, out last September, pointed at children's online privacy rather than the sweeping competition theories the prior commission pursued.
The contraction in defense work that followed was real but uneven. SEC public-company enforcement and big-ticket merger review both slowed in ways you can measure. Labor antitrust kept growing, and the Justice Department landed its first guilty verdict in a wage-suppression case. Privacy enforcement, children's privacy in particular, picked up speed. The regulatory practice of 2026 is not the one that staffed up in 2022.
What grew while the headline shrank
Three areas are moving against the broader slowdown. Children's privacy and data protection, climbing at both the FTC and the state level, is one. Labor and wage-suppression antitrust, where the Justice Department has shown it will prosecute and now has a conviction, is the second. AI-specific exposure is the third: the deployer duties under new state AI laws, FTC consent-decree compliance, and the sector rules emerging at the SEC and CFTC.
In our searches the firms that quietly retrenched are the ones that scaled pure SEC and merger-review defense hardest in 2022 and 2023. The ones expanding are building investigations, compliance, privacy, and AI-governance benches instead, and they are doing it faster than pure enforcement defense, because corporate clients want proactive risk work more steadily than they need someone to fight an active case.
The problem at the firms that bought the boom
A firm that brought on a row of SEC defense laterals between 2022 and 2024 is now carrying that cost against a docket that, in some areas, came in well under projection. The first response across the market in 2025 was to slow new hiring. The second, starting late that year and running into 2026, has been quiet repositioning. Senior associates moved out of pure enforcement defense and into compliance, investigations, and the growing privacy and AI lanes, and junior-partner promotions thinned in the groups that hired hardest in the boom.
The structural change we tell a regulatory group leader to make is to stop hiring against the 2022 enforcement picture and start rotating senior associates into the three lanes that are actually growing, before promotions stall and the strongest people start taking calls.
What we tell regulatory candidates now
For a candidate sitting in a heavy SEC or merger-review practice at a firm that overhired, the question is whether the bench around them is rotating into the growth areas or being parked while the firm waits for the next cycle. Both are happening, and which one you are in decides your next two years of assignments and your shot at promotion.
The question we tell a regulatory candidate to ask is whether the bench around them is rotating into privacy, labor antitrust, and AI work, or being parked while the firm waits for a cycle that may not return. For a candidate with depth in those growth lanes, the 2026 market is the mirror image of the headline: real demand, thin supply, and leverage that was not there a year ago.