We’ve written about this before (here), but a recent article in the National Law Journal (via law.com) makes the point that more regional firms in cities whose economies were not so tied to capital markets are faring better during the current economic crisis. Some are even taking advantage of the crisis to take on new talent and expand into other regions.
The Recorder, one of Norhtern CA’s legal dailies, published its annual associate salary and bonus survey in its October 5th edition. We could not locate an online link, but the Library and the CDO both subscribe to the Recorder if you are interested in looking at the whole article.
In reading the article, it becomes obvious that large law firms are still trying to figure out what to do in this area. There seems to be a consensus that each law firm is likely to respond differently, but that the status quo (annual, lock-step increases) will likely not hold.
It notes that only a few firms have officially announced that they are stepping back from the $160,000 first year BIGLAW starting salary, but that none have affirmatively announced a definite intention to stick to it going forward. The suggestion was that firms will quickly conform to what they perceive their competition to be doing.
The author interviewed a legal business consultant who noted that firms were realizing savings in other ways — layoffs, salary freezed, deferrals — and most notably by simply hiring alot fewer new associates. He speculated that large law firm hiring is down by one-third to one-half.
The article has an accompanying chart that makes it easy to compare compensation figures for 20 large CA firms.
Interesting article in today’s Recorder — via law.com — entitled “The Way Some Law Firms Die Now.” It is mostly about the demise of Heller Ehrmann, but there is also iteresting commentary from consultants who discuss law firms’ “economic resilience” and what is (or was?) perhaps different about “homegrown” SF firms.
Following up on yesterday’s post, we found a link to the actual Peer Monitor Index Report to which we referred.
Back in April, we posted on the subject of some key legal industry business metrics from the 1st quarter of 2009. The data was published by Hildebrandt International‘s Peer Monitor Index. See our earlier post for a further description of the Index.
Data from the second quarter has apparently been released (at least to the press) and the National Law Journal has reported on the numbers. You should read the entire article, which is available on the law.com website here.
Bottom line seems to be: business in general has not gotten worse since Q 1, which is a sign that the bottom may have been reached and that things are stablizing.
Very useful piece in the National Law Journal (via a link on the law.com website) about the current state of litigation work.
– litigation work has not picked up in the way it did during the last downturn (which is what many expected)
– on the positive side, it generally has not decreased in the way business in other practice areas have
– more specifically, intellectual property litigation, is off by about 8% according to a survey of Frotune 1000 legal departments conducted by BTI Consulting, but bankruptcy and employment litigation has increased
– part of the reason work has not increased is a mind-set among general counsel at cash-strapped companies that the company cannot afford litigation and its associated risks
– another reason that litigation work has not increased is that it has gotten more expensive as the costs of e-discovery have risen
– experts predict that litigation work will increase during the second half of 2009 as the economy is expected to stabilze.
Read the whole thing here.
Among those are: de-leveraging, salary rollbacks, emphsasizing training of new associates (and de-emphasizing the need for them to be billing all of their time from the minute they start at the firm), and alternative billing arrangements.
The American Lawyer reports on Citibank’s Private Banking Flash Report on their law firm clients from the first quarter of 2009. They aggregate the data (without identifying individual firms) of their participating clients, which consist of 71 Am Law 100 firms, 50 Second Hundred firms, and 54 smaller firms.
A few key findings:
Revenues were down 3.7% over 2008 Q-1; demand was down 6%; and headcount up 2.5%. Also, AmLaw 100 firms were more affected than the rest.
Read the whole thing — especially Citibank’s recommendations to its clients.
Leigh Jones published a piece in the National Law Journal today (available via law.com) containing some troubling news for members of the Class of 2009 and 2010. Legal market followers express a great deal of skepticism about whether firms will be able to start graduates from these classes when they say they can. These experts note a “pile-up of talent” and uncertainty among firm leaders about “what their next business model might be” and how exactly new associates will fit into it. Their conclusion is that “most firms won’t need all of their deferred associates once the deferral date arrives.”
The American Lawyer published an interesting read called: “Are Blue Chip NY Firms Losing Their Balance?” available via law.com.
A particularly interesting fact, which helps put the current dismal financials into perspective, is that, in the 4 year run-up to the 2008 melt-down, many of these elite firms saw their profits per partner increase something like 60, and in some cases 80 or 90%!
Some of this increase was the result of leveraging up — several had leverage ratios in excess of 4:1. The least leveraged of the elite 15 had a ratio of 2.9:1.