Citibank’s Mid-Year Financial Report on Biglaw

By Terrence Galligan | Posted on

Citi Private Bank recently surveyed its customers, which include many of the largest law firms in the country and its results were similar to those of Hildebrandt and Wells Fargo (which are the subjects of our previous two blog posts). 

Both demand and revenue are up slightly, but so are expenses.  Headcount remained flat, which suggests lawyers are working a bit harder. 

Citi’s report states:

[T]he economy appears to be in for a protracted period of slow growth or no growth, given the systemic issues it is facing. . . . It’s hard to see any way that this environment is good for law firms in the short term. There’s a good chance that M&A, private equity, and IPO work will slow as companies and investors seek some clarity before doing deals, and a spike in litigation seems unlikely.

 

Since the pie is not getting any bigger, one of the only ways for firms to grow is by cutting into their competitors’ slices.  Accordingly, Citi predicts, “top-performing firms will seek to leverage their market advantage to buy talent for their weaker practice areas” just as “rainmakers at underperforming firms” are exploring the job market for other opportunities.

Further Evidence of Slight Improvement in 1st Half of 2011

By Terrence Galligan | Posted on

The American Lawyer’s AmLawDaily just wrote about results of a Wells Fargo survey that supports the findings of the Peer Monitor we blogged about a little over a month ago.

While there was a wide divergence of results, on average, net income, revenue, and profits per partner were up slightly at the nation’s largest law firms.

The survey also found that there is more litigation work. 

In discussing the survey results, a Wells Fargo managing director predicted that growth will slow for the second half of 2011, but that it will still end up being a better year than 2010 overall. 

The full survey results, which were collected by Wells Fargo Wealth Management’s Legal Specialty Group, are not available, but you can read the AmLawDaily report about them here.

By the way, for those of you think you may be headed to biglaw or are considering it, you ought to consider subscribing to the AmLawDaily enewsletter.  There’s a free limited access version, which you can sign up for here.

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.”

Long-term Trends Impacting The Legal Job Market

By Terrence Galligan | Posted on

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.

Market for Associates in Silicon Valley Picks Up

By Terrence Galligan | Posted on

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.

Interviewing Tips

By Terrence Galligan | Posted on

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.

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.” 

Daily Journal’s Top IP Lawyers List

By Terrence Galligan | Posted on

The Daily Journal has come out with its annual list of California’s leading IP practitioners.  The online version is subscription only, but we do have the article here in the CDO if you’d like to take a look.