April Fools’ Day is a terrible day to be in this business. Every tip that comes in requires an extra layer of scrutiny because even longstanding, trusted sources are trying to troll. It’s really not all that funny to make up false but entirely believable stories and pass them off as real. That’s why the Daily Currant isn’t funny.
Which is why when Citi Private Bank issued its First Quarter report on the confidence of managing partners across the legal landscape and declared that managing partners have a rosy outlook, it earned a double take on this end. After all, wasn’t it just a few months ago that managing partners were telling the American Lawyer that it was all gloom and doom on the horizon?
So is this result real? It is, but the headline isn’t the end of the story….
Managing partners are supposedly happier, eh? It’s hard to point to anything in the last three months that would account for a cheerier outlook. You can’t even say improved weather is the culprit. Or maybe the horrible weather is the reason for the uptick? Whatever.
Nonetheless, the report trumpets a six point increase in managing partner confidence to a 115. Wow, 115! Did you imagine we’d be seeing a number like 115? What does “115” actually mean? I have no idea, but it’s apparently a good thing. Except the scale runs to 200, meaning 115 is actually kind of tepid. If the scale ran to 100 like normal scales in this world, we’d say managing partners are about “57” happy, which sounds kind of depressing. But if bad news is still triple digit news, maybe people will think it’s good news?
Anyway, Citi tells us that managing partners are about 3 percent more optimistic than they were at the close of 2013, which sounds like noise to me, but we’ll give them the benefit of the doubt. Lost in the effort to write upbeat headlines is the fact that the majority of managing partners continue to predict that the market overall and the legal market specifically will be the same or worse going forward. Couple that with the natural bias managing partners have for overestimating their own odds of success, and this report looks considerably less upbeat.
Most interesting is the spin given to the expectation of managing partners regarding discounting pressures from clients:
On the subject of discounting their fees, most firm leaders appear to believe the worst is behind them — at least for the moment — with the confidence rating in that category rising six points, to 81, in the latest survey. Fifty-eight percent of respondents said they expect their discounting efforts to be unchanged this year.
Well, yeah, “most” firm leaders think things won’t get worse given that a bit over 50 percent see no change. But the six point increase in confidence glosses over the fact that only 3 percent of respondents see even a modest alleviation of discounting pressure. Fully 39 percent of respondents think discounting pressures are going to get worse! The leaders of Oceania would like to present an award to whomever looked at these results and teased out that managing partners “believe the worst is behind them.”
So maybe there was an April Fools’ joke going on in the PR departments selling this report. Regardless, the real takeaway appears to be that managing partners are basically exactly where they were three months ago — skeptical but cautiously optimistic about modest gains.
Let’s see where we are by mid-year when partners actually have some sense of whether their financials back up their predictions.
Citi Survey Shows Law Firm Leader Confidence Ticking Up [American Lawyer]