First Quarter 2009: It Still Stinks
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.
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
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bdeep
I haven't read a single person/source predicting recovery before Q3 or Q4 at the earliest. This is not remotely surprising.
Does anybody else have Lady GaGa's infectious groove, "My Poker Face" stuck in their heads?
Because I don't.
I think it is high time that one of the big sports leagues like the NBA moves a team to Las Vegas. The idea that this will somehow corrupt the games is absolutely ridiculous. By the way, I think that Las Vegas should name a casino game after yours truly. Think about it. There are games named after Jack Black and Bert Bacharach. I bet that I have lost more money in Las Vegas than both of those guys put together! Maybe just change the name of craps to Barkley or something like that. Who wants to play a game anyway that sounds like it takes place in a bathroom!
If I'm reading that right, it's actually worse than they say. They're comparing the AM Law 100 firms to the whole sample, even though they make up roughly 40% of the whole sample. A comparison between AM Law 100 and not-AM Law 100 would be more appropriate, and would show a more dramatic contrast.
President Obama announced on C-Span yesterday that the U.S. Treasury is broke. China has warned that the U.S. might lose its AAA sovereign credit rating if it continues to print more money (which Obama is recklessly doing by commissioning more printing presses). What did you expect for electing an unproven and an inexperienced candidate for leadership? Forget his predictable yet lame Supreme Court nomination. America's captains of industry are fleeing the country en masse due to Obama's oppressive plan to tax them heavily to pay for his reckless spending/programs. Peer firms are in Obama's crosshairs, thereby, causing the pain felt by today's generation of lawyers. In the end, those with industry and jobs will leave the country to friendlier nations and America will become a cesspool of a welfare state feeding on itself. Is that the change you believe in?
I can see that bull's balls.
I now have an insatiable urge to pound my secretary in her ass.
not surprising and not that distressing. The fall in revenue is not catastrophic - if it remains <10% from 2008 - we're not in bad shape.
When we control the spice, the first quarter that shows an uptick will be fall 2010.
~Padishah Emperor Shaddam IV
#7 NAILED IT!!!!
12th ... donut for MysTTTal today
The recession is clearly over. The markets are skyrocketing on the Sotomayor news.
PE, are you really a 1L?
Does anybody have any clue as to what is causing this most unholy pressure on my sphincter?
GULC5L
I wonder how honest these firms are even in an anonymous survey.
The day PE steps on a plane for Paraguay or Argentina or whatever "friendlier " nation will be a great victory for America, so I guess Obama needs to keep up the great work on whatever it is you're ranting about.
Go ahead 8. She probably won't feel a thing.
Does anybody else here take Viagra at work, just for shnits and gizzles?
Does anyone else feel like Elie is happy to report terrible news like this? His tone is rather upbeat for such bad news. More evidence that ATL is lining its pockets on fear and panic....
#6 is right, everything was so much better
when I was President. This study confirms
that the economy crashed January 20, 2009.
It's all Obama's fault.
aaaaargh! i'm so f**cked.
Coke on a Tuesday, bitches!
Skadden Secure
ps: YOU ARE ALL IDIOTS
It stinks like fat sweaty Texans in here.
How about an ATL survey of how many hours people have billed so far this year, by firm and dep't?
godzuki here saying although i look young, i've been roaming the depths of the atlantic for hundreds of thousands of millions of years... partner emeritus, you are at a point in life in which you may realize (as i do) that the only thing constant is "change"... humans tend to make decisions based on priniciples, and the higher one's principles, the "better" the decisions... obama strikes me as one who has high principles... high technology with low principles is not good - i've seen what happened to atlantis and other great cities of that time... sometimes the best way forward is backwards...
14 - I am really a 1L. Do you like all of my BS on these boards? I guess it shows that anyone can impersonate a law firm partner as long as that person can hide behind a computer.
oh no I might not have a job soon because its so bad out there oh wait i am already fired. Eeeek!!!
-R. Herbst
22,
I heard Skadden only serves Pepsi?
p.s. using caps is for losers!
gwaa gwaa gwaa
Revenue is down but profits are likely up. Thanks to the involuntary departure of the many..
#28 - Its May 26th, stupid.
The consultant wasn't only referring to associates. The consultants are pressing hard for firms to push out the door all those partners who don't have a huge book of business. In short, close to 50% of partners in BigLaw lack the book of business that is deemed sufficient to warrant being a keeper. As for associates, firms should fire as many as possible as quickly as possible. They aren't needed, so why incur the expense. When business improves, there will be plenty of suckers waiting in line to sell their souls.
Louis Zaccareli delights in the fact that he makes more than all of you and is a much better dresser.
PE is a 1L (soon to be 2L) classmate of mine at an OK but certainly not stellar school in the Northeast. There are many people here that know that he has been writing these comments on ATL (most were written during class), and he thinks it is hilarious. Please let someone with more guts than me out him so that this can finally end.
The ship be sinking...
Great that this economic crises was timed perfectly to end my biglaw career before it even began.
Though, most firms haven't laid off first years to the extent that Latham has, so maybe the problem is that bobby and dave aren't the awesome managers they pretend to be.
Off to shitlaw for me, that is, until I get the courage to leap off a rooftop.
-laid off latham first year
26. You are totally weak. Get your own pic and running gag. It's not that hard. There's a guy on here who has made something out of opposing red and green lines. Your attempt at parody just exposes how much you admire PE. It's just weak.
--Elie
"Even more disturbingly, the revenue drop was more pronounced at top firms than the rest of the sample:".....I would imagine whether you find that fact "disturbing" , depends on where you work. Folks at smaller firms, which are not suffering to the same degree, might not mind.
Ah, Sonnenschein. What do you expect from a place that paid millions to Thacher Proffitt management to screw half of their firm by putting themselves into dissolution and giving Sonnenschein their assets! Spread ‘em!!!! - "Hard Anal" Tvetenholdt
First quarter was so bad that McDermott has further pushed back its incoming first years' start date from Nov. to Jan.
"Nothing says "firm morale" quite like treating your employees as if they are a deadly blockage that threatens the health of the entire system."
Best line so far this year. Now I understand how you made it through Harvard.
37/Elie -
Thanks for the shoutout!
TDIDG
Elie at 37 is probably PE. His writing is often on par with a 1L. Has PE finally outed himself?
Ellie - You're weak.
13:
Like all liberal imbeciles, you have no clue what you're talking about. Market rose because of the huge, unexpected increase in the Consumer Confidence index, not hecatse of Obumble's SCOTUS pick.
EPIC FAIL
All kidding aside, please, has Latham actually laid off first year associates?
A number of AmLaw 100 firms are not on a calendar year reporting basis so 1Q results may be only through January or February of this year. There is anecdotal evidence suggesting that revenue results through April are off even more than reported for the first quarter.
I agree with 47, both in terms of the FY for most firms (my last firm had a Feb. 28 year end) and how much revenue is off.
There is no way revenue has "only" fallen 5% for most firms in AmLaw 100, just taking into account the layoffs over the last 6 months, that's a significant amount of headcount no longer bringing in revenue (profit is another issue). These reports are voluntary. My best guess is that revenue is off between 15-20% at most firms compared to last year. Billables are down, and more importantly receivables are down.
I am not a lawyer. I am a union organizer. I read this blog because I love what is happening to the profession that wrote NAFTA, CAFTA, SHAFTYA, and every other devaluation of American labor.
You lawyers need to understand that we workers need to shoot your nasty little butts for making every American welder compete with every Malaysian welder.
Truly enjoyable was the whining little esquire crying about his work being outsourced overseas. Karma is a bitch, is it not?
Starve and die, you lawyers. The economy is carrying out Mr. Shakespeare's advice.
" I read this blog because I love what is happening to the profession that wrote NAFTA, CAFTA, SHAFTYA, and every other devaluation of American labor."
Yeah, because all of the posters and lurkers here are people that had so much to do with those laws. You do realize that for those few lawyers that practice labor law, as many represent unions as they do management, right?
Way to keep up the stereotype that you yoonyin' folks are nothing more than uneducated, ignorant buffoons. And please, when you use the term "worker", plese put it in quotes, sitting on your ass doing nothing collecting cash from the jobs bank does not constitute work.
Communist asshole.