find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Results confirm: law firm business is down

Results confirm: law firm business is down

First quarter results for American law firms confirmed what many in the industry had already realised, business is down.

FIRST quarter results for American law firms confirmed what many in the industry had already realised, business is down. 

According to data from Citi Private Bank's Managing Partner Confidence Index (MPCI), law firm leaders are worried and are getting more worried as the year progresses, reports The American Lawyer

71 percent of the respondents in the first-quarter 2009 MPCI believe that demand for legal services will be flat or down in the next 12 months, compared to 66 per cent in the fourth quarter of 2008. 

The same was true for profits: In the first quarter of 2009, 71 per cent of respondents predicted that 2009 profits would be flat or down, versus 54 per cent in fourth-quarter 2008. 

In addition, Citi's first-quarter 2009 Flash Report indicated that revenues of the 175 firms that provided data were down 3.7 per cent from first-quarter 2008, a period that was not particularly robust. Demand for services at those firms declined six percent from previous year levels. The Flash Report includes results from 71 Am Law 100 firms, 50 Second Hundred firms, and 54 smaller firms.

Citi Private Bank confidentially surveys firms in The Am Law 100 and the Second Hundred, along with smaller firms each quarter, and represents more than 600 law firms in the US and UK. 

These reports, together with extensive discussions with law firm management conducted on an ongoing basis, provide a comprehensive overview of financial trends in the industry and insight into where it is headed.

Dan DiPietr, client head of the Law Firm Group of Citi Private Bank, said most recent data shows that Am Law 100 firms were hit harder than the broader sample: “For them, revenues and demand fell five per cent and seven percent, respectively (versus 3.7 per cent and six percent for the full sample).” 

In fact, Second Hundred firms saw a modest increase of 1.1 per cent in revenues and a smaller drop of 1.8 per cent in demand. It appears that firms with heavy reliance on transactional work and clients who are more heavily weighted in financial services are feeling the financial squeeze more than others. 

Overall productivity (average hours per lawyer) is down by more than eight per cent, because of a slight increase in head count, but a fall in work. Overall, the industry grew 2.5 per cent, but this number would not include the full impact of first-quarter layoffs, The American Lawyer reports.  

However, on a more positive note, expenses in law firms are down, 4.5 percent (which can be mainly attributed to falls in associate bonuses). With further good news on expenses expected in the second quarter of 2009-due to the layoffs implemented in the earlier two quarters, meaning margin compression should lessen. 

As for demand, when Citi compared a group of 105 firms, in fourth-quarter 2008 and first-quarter 2009 they found that demand in first-quarter 2009 was up slightly-about 0.3 percent. DiPietr suggests that this is an indication that things may have hit bottom, “but it also tells us we're not seeing a strong and speedy rebound”. 

He added: “It will be a somewhat worse year for the broad industry than 2008 was, and the top firms will again underperform, as they did in 2008.”

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Results confirm: law firm business is down
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...