Demand for large law firm legal services was, on average, up slightly for the first quarter of 2012, according to a recently released report by the well-known legal business consulting firm, the Hildebrandt Institute. 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). 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.
While demand is up, the report sounds several cautionary notes:
First, demand is not up across the board. Employment and IP litigation are up modestly, but corporate work is slightly down.
Second, firm expenses have increased by a higher percentage than demand, which has an effect on profitability.
Third, the replenishment ratio for associates is up slightly (to 1.4) in anticipation of increased demand that has “not materialized at a pace that fully utilizes the talent that is being added.”
The increase in demand for large firm legal services was highest in Silicon Valley (up 4% as a result of a concentration of IP-related work). LA was next highest, with a 3% increase in demand (NY and CHicago were up 2%).
Looking at all these factors together with the lingering uncertainty in the larger economy led the drafters of the report to conclude that “2012 could be one of the most challenging years in recent memory for law firms.”
The latest annual Hildebrandt/Citibank Client Advisory is out. We’ve posted about the Client Advisories before (see here and here).
You can read the whole report here.
- demand for legal services is not likely to grow robustly for the foreseeable future
- to gain greater efficiencies, firms will continue to seek out new business models based on “redesigned work processes, greater emphasis on project management, and new approaches to expense management and professional development”
For those of you interested in working for a law firm after graduation, Prof. Bill Henderson has a must-read piece in the ABA Law Journal, which has the uplifting title “Law Job Stagnation May Have Started Before the Recession-And It May Be a Sign of Lasting Change.”
The article states that “massive structural shift[s]” are happening in the legal industry and that they are the result of long-term trends like increased use of technology and globalization. The Great Recession accelerated the pace of change, according to Prof. Henderson, but was not its root cause, which means that change is here to stay –even after the economy fully recovers.
Here’s a key quote:
Whether BigLaw lawyers, boutique specialists or solo practitioners, U.S. lawyers can expect slower rates of market growth that will only intensify competitive pressures and produce a shakeout of weaker competitors and slimmer profit margins industrywide. Law students will find ever-more-limited opportunity for the big-salary score, but more jobs in legal services outside the big firms. Associates’ paths upward will fade as firms strain to keep profits per partner up by keeping traditional leverage down.
Interesting article in the Recorder reports that the job market for experienced associates in Silicon Valley firms has been picking up steam. However, the article states that the job market for brand new lawyers, unfortunately, currently remains “tight.” Still, it’s good news because its a sign of an improving economy overall, which will eventually produce a positive effect on the entry level market.
A recent piece in the New York Law Journal, written by the legal recruiting manager of a large law firm, offers alot of helpful suggestions for preparing for interviews.
It also contains some tips about a style of interviewing that is starting to gain momentum with legal employers- behavioral interviewing.
Definitely worth a read.
The ABA has undertaken what appears to be a careful and detailed study of the geography of lawyer salaries. They’ve developed an online search tool that enables you to see where the jobs are and what they pay by county. They’ve also “identified 10 smaller markets whose average salary figures may surprise you—lesser law markets that are paying big-city bucks.”
You can read their entire findings, which comprise the cover story of the latest ABA Journal, here.
Today’s Recorder contains an article about 2010 revenues and profits at eight Northern California based law firms. It also reports on interviews with some of the firms’ leaders about what they are expecting for the future.
Read the whole thing here. Notably, head count at six out of the eight firms dropped in 2010.
“Extreme caution about hiring remains the rule – even at firms like Morrison & Foerster, where revenue per lawyer was up a healthy 6 percent. Chairman Keith Wetmore said MoFo’s biggest challenge was aligning head count with work levels. ‘We’re being very careful not to let groups hire ahead of demand,’ he said. ‘We’ve also managed costs and staff head count aggressively, not replacing people when they leave, restricting travel costs and revisiting our marketing and tech budgets.'”
The National Law Journal recently conducted a roundtable with 3 managing partners at large DC-based firms. They talked about staffing, rates, client demands, lateral recruiting, the political landscape and the future of the legal business model. A summary of the discussion appears here.
You should read the whole thing, but a few highlights:
- IP litigation was unexpectedly slow in 2010, but is expected to increase in 2011
- things have stabilized, but not likely to get significantly better in 2011
- the expected increase in the government regulatory area did not materialize and the results of the mid-term elections suggest that it may never materialize
- no one is expecting layoffs and salaries and bonuses have been — and are expected to continue to be — unfrozen
- clients are expected to continue exerting pricing pressures; the billable hour will not disappear, but the use of alternative fee arrangements will continue to increase
- we can expect to see a continuing of the trend of increased merger activity and lateral movement by partners and practice groups to competitors
NALP, the Association of Legal Career Professionals, just released its annual analysis of the use of part-time schedules by lawyers at law firms.
The headlines are that part-time lawyers remain the exception and that their ranks are comprised mostly of women. However, the number of male partners practicing part-time “edge[d] up.”
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 July – September of 2010.
You can read a summary of the report here. You can read the whole thing here.
Among other things, the report shows that — very much in line with how the overall economy performed in Q 3 — the market (at least for large law firm legal services) lost a bit (but, by no means, all) of the ground it (ever so slowly) was gaining over the previous several months.
Demand for services was down 1% over last year. Productivity [hours per attorney] actually fell by .4%, which reversed a recent trend of modest increases (though the rate of increase showed some slowing in the previous quarter). The gains in the previous quarters had largely been due to headcount reductions. The report summary states:
“Reduced productivity is pressuring firm profitability and may cause firms to re-evaluate their hiring patterns in the face of weak demand and pricing. This is particularly relevant because many previously deferred new associates are scheduled to begin work in early 2011.”
We’ve regularly blogged about the Peer Monitor system before (click here to view the most recent prior post), 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.