Biglaw, Citigroup, Federal Government, Money, Partner Issues, Partner Profits

Yikes! Are D.C. Law Firms In Trouble?

D.C. is dysfunctional, as pundits constantly complain about. Has the lack of productivity on Capitol Hill expanded to affect the private law firms of Washington?

Perhaps. According to Citi Private Bank’s recent survey of law firm performance, which showed that the first half of 2013 was bad for Biglaw nationally, D.C.-based law firms did even worse than their counterparts in other cities.

Let’s look at the numbers….

Here’s a report from Jeff Bezos’s shiny new toy the Washington Post:

Revenue, demand and productivity — the number of hours that lawyers billed their clients — all fell more rapidly among D.C.-based law firms than they did at law firms nationwide in the first six months of 2013 compared with the same period last year, according to data compiled by Citi Private Bank Law Firm Group. The group surveyed 172 law firms nationwide, including 12 Washington-headquartered firms….

[T]he findings are significant because they go against the long-held conventional wisdom that Washington firms, with their proximity to the constant churn of government-related work, have weathered the recession better than those in other regions where legal work is more susceptible to market downturns.

Actually, if you think about the time period in question, the survey findings aren’t that surprising. You’d expect the tightening of the federal government’s purse strings in the first six months of 2013, reflected in the sequester, to have a negative effect upon the performance of Washington law firms. If the government is regulating less, prosecuting less, and contracting less, that reduced activity will hit firms inside the Beltway where it hurts.

How much hurt? Per the Post:

  • Revenue at D.C.-based firms dropped 2.4 percent, while revenue at firms nationwide grew 0.5 percent.
  • Demand for legal services at D.C. firms fell 2.5 percent, while demand at firms nationwide dipped 1.3 percent.
  • Productivity at D.C. firms declined 4 percent, while productivity at firms nationwide fell 1.7 percent.
  • [E]xpenses continued to climb at D.C.-based firms, though they did so at a slightly slower rate than at firms nationwide. D.C. law firms saw expenses rise 2.2 percent, compared to 2.4 percent nationwide.

Washington is a pretty messed-up place these days (as colorfully depicted in Mark Leibovich’s buzz-generating new book, This Town (affiliate link)). Let’s hope that Congress can get its act together in the final months of this year, pass some new laws, and generate some work for D.C. firms.

It’s not just for the sake of padding partner profits. If firm performance doesn’t improve, lawyers and staff could lose their jobs. Please, Congress — think of the children associates!

Survey: D.C. law firms lag national averages [Washington Post]

Earlier: How Did Law Firms Fare In The First Half of 2013?

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