General

Q3 Numbers: At BIGLAW, Expenses Outpace Uptick In Business

By Terrence Galligan | Posted on

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 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.

You can read a summary of the report here.

Among other things, the report shows that demand for legal services continues to grow, though the rate of growth has slowed.  At the same time, expenses have continued to increase as has the rate of that increase.   Part of the explanation for the increase in expenses is that new attorney hiring has increased (as it has been doing for the previous three quarters) in anticipation of growing demand. 

The report warns: “While firms have been hiring, however, demand has slowed as the year has progressed, widening the gap between law firm capacity and available work. Whether this trend continues will depend on the performance of the broader economy and whether we see continued recovery in litigation and transactional work.”  Stay tuned.

Q 2 Numbers: Law Firm Market Continues Incremental Improvement

By Terrence Galligan | Posted on

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 April – June 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. 

You can read a summary of the report here. 

Among other things, the report shows that — very much in line with how the overall economy performed in Q 2 — the market (at least for large law firm legal services) gained a bit for the third quarter in a row.  However, the “soft patch” that the economy recently hit is causing law firms to “prepar[e] for continued uncertainty and  monitor[] headwinds and risk factors.” 

Bottom line:  “While the law firm market continues to show gradual improvement, growth is still well below historical averages, and a myriad of cautionary factors remain in place, including client rate pressures and
rising costs.”

Q 1 Numbers: Large Law Firms Doing Slightly Better

By Terrence Galligan | Posted on

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. 

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 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.” 

Finding Small Firm Opportunities

By Terrence Galligan | Posted on

The Above The Law blog recently started a new series for small firm lawyers called Small Firms, Big Lawyers.

The latest installment is entitled The Secret To Finding A Small Firm Job.  You should read the whole thing, but one highlight was the testimony of the author — the principal of a small firm — that his suggested method, which comes down to informational interviewing, works: 

“Over the past 13 years, I have hired five lawyers whom I first met in informational interviews (months or even years before I hired them). In addition, I know of six other informational interviewees who ended up with jobs that they got after I sent them to other lawyers.”  

We have a a bunch of resources on the subject of Informational Interviewing on the CDO website. 

Some Smaller Legal Job Markets That Pay Surprisingly Higher Salaries

By Terrence Galligan | Posted on

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.  

N. CA-based Firm Leaders Hopeful For A Better Year

By Terrence Galligan | Posted on

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. 

One highlight:

“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.'”

Experts: Legal Market Stabilizes, But At Well Below Pre-Recessionary Levels

By Terrence Galligan | Posted on

The latest annual Hildebrandt/Citibank Client Advisory is out.  We’ve posted about the Client Advisories before (see here). 

You can access the whole report here.

Among other things, it predicts:

  • continued sluggish demand for legal services on the part of corporate clients
  • associate recruitment goals have stabilized at levels much lower than in pre-recession years and are likely to remain there for the foreseeable future.

Some Biglaw Financial Forecasting

By Terrence Galligan | Posted on

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 

Q 3 Numbers: Large Law Firms Lose A Little Bit of Ground

By Terrence Galligan | Posted on

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.