The well-known legal business consulting firm Hildebrandt Baker Robbins just published a report of its Peer Monitor Index, which includes information about key law firm business metrics for January – March of 2011.
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). There are 35 Am Law 100 firms, 35 Am Law 200 firms and 30 NLJ 250 firms in the system. You can find more information about the Peer Monitor system here.
Among other things, the report shows that — very much in line with how the overall economy performed in Q 1 — the market (at least for large law firm legal services) gained a bit for the second quarter in a row. However, challenges remain. Growth is “constrained,” realization rates [i.e., the percentage difference between time spent on a matter and the amount of time for which the client actually paid] remain “low,” and expenses [which firms did a great job of cutting in order to remain profitable during the recession] have “begun to grow again.” As to hiring, the report summary states that firms are “currently being very conservative in adding capacity.”
The report concludes:
“As we move into mid‐year, law firm activity is gradually increasing and, for some firms, demand is strong, providing optimistic signs for the remainder of 2011. But in this economy, one still needs to be watchful for unexpected developments. The legal industry is now poised at an inflection point where firms must transition from a defensive to a strategic posture, and shift focus from extreme cost controls to achieving sustained revenue growth. However, attaining that goal will not be easy, and will, in most cases, require firms to change their traditional business models.”