Biglaw, Conferences / Symposia, In-House Counsel, Money, Partner Issues, Partner Profits

How Did Biglaw Do In The Third Quarter Of 2014?

Some firms should be happy, but others should be worried.

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Back in May, we brought our readers news of how Biglaw fared in the first quarter of 2014. We learned from the results of Citi Private Bank’s analysis that the “vast majority of firms [were] doing just fine.”

That’s nice, but now that 2014 is beginning to come to a close, people are interested in how the money ebbed and flowed throughout Biglaw as the year progressed. How are we doing nine months out?

According to the latest report from Citi, some firms should be happy, but others should be worried…

Compared to the first half of the year, revenue growth slowed at the 178 firms surveyed due in part to a “lengthened collection cycle” in the third quarter of 2014. As with any other business, the third quarter is when law firms have to start chasing down clients to pay their bills. Continue churning those bills, baby.

Collection issues aside, revenue gains exceeded expense growth, just like they did in the first quarter, but this time it was driven “largely” by an improved demand for legal services, as well as rate increases. Is pricing power still in the hands of in-house counsel? These results could be telling for the future.

Per the Am Law Daily, law firms with “strong transactional practices” and “substantial global footprints” — those categorized as Am Law 1 – 50 firms — were able to outperform their competition. Yet again, we’re seeing the “super rich” firms of the Am Law 100 taking the lead. Didn’t make the cut? Too bad, so sad.

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There was some more good news in the Citi results: Overall productivity, measured by hours per lawyer, continued to “gain momentum” from the first half of the year. Productive lawyers mean more billable hours and more fees to collect, so some Biglaw firms can expect to see even more revenue growth as a result.

Here’s the take of Citi’s Dan DiPietro and Gretta Rusanow, writing in the Am Law Daily, on what the results mean for 2014 as a whole for Biglaw:

Prospects for the full year appear bright when we consider the healthy growth in inventory (work that has been performed but not yet collected on) at the nine-month point. We’re sticking to our original 2014 forecast that the year will modestly exceed last year’s profit growth and that the Am Law 1-50 segment will outperform the other segments.

As with anything having to do with law, it seems that the answer to whether and how well your firm can weather 2014 is “it depends.” For your sake, we hope you’re at a top-rated Am Law firm.

Citi Report: Third Quarter Results (Almost) All Good for Law Firms [Am Law Daily]

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Earlier: How Did Biglaw Fare In The First Quarter Of 2014?
The 2014 Am Law 100: ‘The Super Rich Get Richer’

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