It’s been awhile since we’ve posted. Among the reasons we’ve been silent is that the financial picture for law firms generally had not seemed to change all that drastically over the last several months. It’s been largely flat for quite awhile.
However, we recently came across some modestly positive news and thought we’d share it. It’s from the latest Citigroup quarterly report and comes to us via the American Lawyer’s AmLaw Daily.
According to Citigroup, the first nine months of 2014 have been good financially for the law firm market. However, the news has not been equally good for each segment within that market. The largest and most international firms (particularly those with strong transactional practices) have fared the best.
Demand for legal services was up 1.6%. At the same time, firms kept a tight control on their headcount, which increased by only .6%. That means, of course, productivity is up. Revenue was up 4.8% at the largest firms (the AmLaw 1-50), but only 3% for AmLaw 51-100 firms and only 1.5% for smaller firms.
Looking at profitability and the segmentation within the industry becomes more apparent. 74% of AmLaw 1-50 firms saw profits per equity partner (PPEP) increase whereas only 59% of AmLaw 51-200 equity partners saw an increase in their profits. 51% of smaller firms saw a PPEP decline.
Citigroup projects that when the data for the entire year is in, the story for 2014 will be “mid-single digit growth for the industry as a whole . . . [with] AmLaw 1-50 firms . . . significantly outperform[ing] the other industry segments.”
Details about how Citigroup gathers its data are contained in the American Lawyer article.