It’s no longer raining cash on the legal idustry.
Dan DiPietro, client head of the Law Firm Group of the Citi Private Bank reaffirms some of the conclusions of the group’s Client Advisory, published jointly with Hildebrandt International this past January, updates others, and gives us a summary of their report for the first half of 2008.
From 2001 through the first half of 2007 law firms have reaped the benefits of a strong economy. Expenses grew, but profits outpaced them. Starting last year, however, expense growth, driven by continued hiring, started to outpace profits.
Despite a slowdown in demand firms continued to add lawyers, leading to a slowdown in productivity not seen since Q2 of 2001. “The increase in total lawyer counts, coupled with the decline in demand, caused productivity, or average hours billed per lawyer, to drop by 5.5 percent in the first half of 2008.”
The advisory issued in January predicted profits of three to five percent this year, but profits are now predicted to remain flat or even fall by as much as ten percent across the industry and to fall five to fifteen percent at the AmLaw 100.
DiPietro suggests the silver lining of what promises to be a bad year for the industry is that firms will have to say goodbye to unproductive lawyers and get a better handle on expenses.
For recruiters and their rainmaker candidates the silver lining is that competition for top producing attorneys will increase.