Tuesday, March 31, 2009
Buckle up, folks, there's still plenty of turbulence ahead. According to Citi's private banking law division which has "for more than a quarter-century . . . analyzed the fiscal performance of law firms annually," managing partners at large firms are not optimistic about the future. The tough times are not yet over according to the Citi quarterly report issued yesterday as noted by BLT.
Of the roughly 120 managing partners surveyed from mostly Am Law 100 and Am Law 200 firms, 64 percent believe legal business will drop even more over the next six months. The survey says firms should not expect major profit growth over the next year, as profits, if there are any, will likely not exceed 5 percent. The majority of managing partners believe revenue will stay flat or decline.
In addition to clients scaling back their use of law firms, an uptick in expenses has also put pressure on firm profit margins. Over the next year, managing partners say expenses will likely grow by about about 5 to 10 percent with lawyer compensation significantly driving that growth. Managing partners, however, are also now pointing to non-lawyer compensation as a factor hiking up expenses.
Hat tip to Law.com and the Blog of Legal Times.
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