Dan DiPietro of the The American Lawyer has penned the following editorial which gives a pretty good insight into the current state of the American Legal Services market..
It doesn’t make the prettiest reading. Managing partners are less confident than the final quarter of 2008, revenues are down and his conclusion .. firms will underperform for the rest of the year.
Here’s the intro to the editorial – read the full piece at
First-Quarter 2009: How Bad Was It for Law Firms?
Coming into 2009, law firm leaders were worried, and they got more worried as the first quarter progressed, according to data from Citi Private Bank’s Managing Partner Confidence Index. Seventy-one percent of the respondents to Citi’s first-quarter MPCI believe that demand for legal services will be flat or down in the next 12 months, compared to 66 percent in the fourth quarter of 2008. The same was true for profits: In the first quarter of 2009, 71 percent of respondents predicted that 2009 profits would be flat or down, versus 54 percent in fourth-quarter 2008.
They were right to be concerned. Citi’s first-quarter 2009 Flash Report indicates that revenues at the 175 firms that provided data were down 3.7 percent from first-quarter 2008, a period that was not particularly robust. Demand at those firms declined 6 percent from year-previous levels. The first-quarter 2009 Flash Report includes results from 71 Am Law 100 firms, 50 Second Hundred firms, and 54 smaller firms.
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On a more granular level, our most recent data shows that Am Law 100 firms were hit harder than the broader sample: For them, revenues and demand fell 5 percent and 7 percent, respectively (versus 3.7 percent and 6 percent for the full sample). In fact, Second Hundred firms actually saw a modest increase of 1.1 percent in revenues and a smaller drop of 1.8 percent in demand. Clearly, those firms with heavy reliance on transactional work and clients who are more heavily weighted in financial services are feeling the pain more deeply.
