Biglaw, Partner Issues

Law Firm Growth Continues... Slowly

Profits are up, and things are looking good.

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money step upAt the year’s halfway mark, Citi Private Bank’s Law Firm Group released its report on the state of the industry and revealed what most of us suspected: tepid, but steady growth. Just the way risk-averse lawyers like it!

The key takeaway from the report is that revenue growth in the first half of the year is attributable primarily to rate increases, a fact that no doubt frustrates the crybaby clients who whined that an extra $10/hour would break the bank of their multi-billion dollar companies. But it should concern lawyers that demand growth remained negligible and productivity declined as hiring outpaced demand. Without demand growth, this party will eventually hit a wall.

But the good news is that Biglaw’s profit margin is up, as revenue growth grew faster than expenses, associate raises be damned. In fact, the report found that overhead contributed more to expense growth than compensation. Now, query if some of those laggard firms not raising salaries until September or later will ultimately shift this balance. We’ll have to stay tuned.

All in all, this report finds that 2Q wasn’t as magical as 1Q, but firms still have a lot to feel good about going into the latter half of the year.

Joe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

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