Biglaw, Partner Profits

First Quarter 2009: It Still Stinks

By  
on

Just to be clear, the first quarter of 2009 was not the beginning of the great recovery everybody is hoping for. AmLaw Daily reports that Q1 revenue fell on average at 175 law firms:

They were right to be concerned. Citi’s first-quarter 2009 Flash Report indicates that revenues at the 175 firms that provided data were down 3.7 percent from first-quarter 2008, a period that was not particularly robust. Demand at those firms declined 6 percent from year-previous levels. The first-quarter 2009 Flash Report includes results from 71 Am Law 100 firms, 50 Second Hundred firms, and 54 smaller firms.
Citi Private Bank provides financial services to more than 600 law firms in the United States and the United Kingdom. Each quarter, the Law Firm Group confidentially surveys firms in The Am Law 100 and the Second Hundred, along with smaller firms. In addition, we conduct a more detailed financial survey. These reports, together with extensive discussions with law firm management conducted on an ongoing basis, provide a comprehensive overview of financial trends in the industry and insight into where it is headed.

Even more disturbingly, the revenue drop was more pronounced at top firms than the rest of the sample:

On a more granular level, our most recent data shows that Am Law 100 firms were hit harder than the broader sample: For them, revenues and demand fell 5.0 percent and 7.0 percent, respectively (versus 3.7 percent and 6.0 percent for the full sample). In fact, Second Hundred firms actually saw a modest increase of 1.1 percent in revenues and a smaller drop of 1.8 percent in demand. Clearly, those firms with heavy reliance on transactional work and clients who are more heavily weighted in financial services are feeling the pain more deeply.

This seems like a good time to mention that, over the same period, tuition costs at top law schools dropped dramatically stayed exactly the same. As Kanye West might say: “law schools don’t care about broke ass graduates suffering through the worst economic crisis since the Great Depression.”
You’re going to love the proposed remedies to the decline in revenue at law firms. Details after the jump.


Dan DiPietro, who consults with law firm managers, has some sage advice for firms trying to navigate this bleak economic environment:

* Be sure you’ve cut enough. I fear there may be the need for more layoffs. Even if we’ve touched bottom, there’s no guarantee that demand will ramp up quickly, so current head count growth must be addressed.
* Weed out your underproductive lawyers. Apologies for the unkind metaphor but marginally productive lawyers are like plaque building up in the arteries of law firms. Many firms have tolerated this buildup during the high-demand years but it’s dangerous to their health if it’s not addressed now.

Sponsored

Nothing says “firm morale” quite like treating your employees as if they are a deadly blockage that threatens the health of the entire system.
But as long as the demand for legal services remains flat, there just isn’t going to be enough work to go around. “There’s too many pigs for the teats.” Even Lincoln would probably be firing associates right now.
First-Quarter 2009: How Bad Was It (And What Does It Portend)? [AmLaw Daily]
Earlier: The AmLaw 100

Sponsored

Topics