This post provides some updated links (our previous post on the topic was from 2012 and has some broken links):
Finally, some advice on the subject via the Harvard Business Review
Citi Private Bank and Hildebrandt consulting recently issued their 2017 Client Advisory.
It predicts another year that will look like the past 6 — low single digit growth in revenue and profitability, continued emphasis on holding down expenses, and relentless focus on improving efficiency, which would include reducing office space and shifting leverage models.
Behind the overall low growth numbers, we can expect to see the forces of dispersion and volatility assert themselves in the market. Some firms will do much better than others, but they may not be the same firms that outperformed the prior year or the year before that.
The anticipated growth is expected to come from more so in transactional practices (particularly M&A and Capital Markets). We are likely to see a decrease in US agency-driven regulatory related litigation work under the new administration.
You should read the Client Advisory in its entirety. The last section identifies some key characteristics of the firms that have been the most successful in this post-recessionary environment.
The Citbank/Hildebrandt assessment of the first 3 quarters of 2016 is consistent with Well’s Fargo’s, which was the subject of our post 2 weeks ago.
Demand for Biglaw legal services is essentially flat (+0.3%); revenue was up 3.8% but only because of rate increases; and lawyer productivity is down.
Underlying data comes from surveys of 41 Am Law 1-50 firms, 35 Am Law 51-100 firms, 53 Am Law 2nd 100 firms, and 76 additional firms.
Wells Fargo’s Private Bank (specifically, its Legal Specialty Group) recently surveyed large law firm managing partners at the end of Q 3. Among the key findings, is that, while revenue is up 3.8% (over the first nine months of 2015), that is not due to an increase in the demand for legal services, but rather owing to rate hikes (an average of 3.6%). Moreover, productivity (billing hours worked per lawyer) was down. And a largely unanticipated increase in associate salaries that took place over the summer added to the expense side of the equation. Despite all this, attorney headcount increased 2.2%.
In an interview with the AmLaw Daily, a Wells Fargo representative said, among other things, that “[t]he industry will probably have to become more aggressive managing attorney head count to the state of demand.”
The findings were based on survey results from 130 large firms, 60 of which are in the AmLaw 100.
Demand for large and mid-sized law firm legal services fell 0.9% in Q2 of 2016 according to a recently released report by Thomson Reuters. Its quarterly Peer Monitor Index Report contains information about key law firm business metrics.
We’ve regularly blogged about the Peer Monitor system before, but to refresh you, it is a service that allows law firms to access their peers’ financial data (in the aggregate) in exchange for supplying their own data to the system for others to access (on a normalized and aggregated basis). Data from Am Law 100 firms, Am Law 200 firms, and mid-sized firms are included in the system. You can find more information about the Peer Monitor system here.
Key observations include:
Legal business consultant, Altman Weil, just published the results of its 2016 Law Firms in Transition Survey. The Survey went out to 800 firms with 50 or more lawyers. They received 356 responses, including about 48% of the AmLaw 200 and 49% of the AmLaw 350.
Citibank’s latest report on the financial performance of the legal industry as of the end of the 2nd quarter 2015 is a bit less optimistic than their 2014 end of year report.
You can find the full report on the first half of 2015 — via the American Lawyer — here.
Revenue — as a result of increased demand for legal services — is up, but it is lagging behind the increases we experienced in the first half of 2014 (3.3% at the midpoint of 2015 vs. 4.4% midway through 2014) and expense growth is up.
The growth in expenses was largely due to the fact that firms paid larger bonuses at the beginning of this year (to reward lawyers for a relatively strong 2014). There was also an increase in operating costs due to expenditures on cybersecurity and health insurance, among other things.
Sounding a similar theme to the Thomson Reuter’s 2014 end of year report, it seems as though not all large firms have experienced the same impact. The AmLaw 100 continues continues to experience positive momentum whereas the Second Hundred actually saw a decrease in demand. Interestingly, it appears that the niche/boutique firm market outpaced both the AmLaw 100 as well as the Second Hundred.
Citi’s bottom line: “While we remain optimistic that revenue and profit will both grow, we believe that they will now fall short of 2014’s results.”
Occasionally, we’re asked about appropriate on-campus interview attire. We think our colleagues at the Yale Law School offer some good advice, which we’ve excerpted below. Keep in mind that dressing appropriately is art, not science. You should look at these simply as guidelines, not hard-and-fast rules.
Your attire should contribute to your professionalism. Although employers may have different dress codes, err on the conservative side when interviewing.
Women (Advice for Men after the jump)
Adobe Systems GC Michael Dillon recently announced the release of a writing style guide for the company’s in-house attorneys to use in their communications with their business unit clients and with each other.
There are lot’s of great suggestions for better, clearer writing, which is, after all, an essential tool of the lawyer’s trade. It also could be an interesting topic for discussion during on campus interviews.
As a follow up to our May 8 posting on Biglaw rankings, The American Lawyer has now published its 2015 AmLaw Second Hundred rankings. Firms are ranked in a number of different ways relating to their financial performance: growth rates, profitability, revenue, etc.
Firms in the Second Hundred tend to be elite specialists, smaller firms in major markets or big regional players.
Check out the data and analysis at their rankings landing page.