Law Firm Leaders Predict Belt-Tightening Ahead
Concerns about the economy are making law firm leaders less optimistic about the coming year, but they still predict partner profits will grow, according to a survey (reg. req.) by American Lawyer.
How will they achieve such a feat? By increasing billing rates and doing some belt-tightening—at the expense of associates and some equity partners, according to the magazine.
Seventy-two percent told the magazine they were optimistic about 2008, down from 91 percent who felt that way last year. And only 41 percent expected the “deal flow” to increase next year, compared to 79 percent who had such expectations last year.
Yet only 1 percent said they would hold the line on billing rates or decrease them. Thirty-seven percent expected to increase rates by up to 5 percent and 62 percent expected to increase them above that amount.
Keith Wetmore, chairman of Morrison & Foerster, told the legal magazine that some of the top law firms may be “in peril,” although his firm isn’t one of them. “What’s on the eight ball when you turn it over?” he asked. “I think it says: ‘The future is cloudy.’ “
Partners interviewed said they will make changes to keep profits high. Eighty percent expect said they would hire fewer partner-track associates or hire a greater percentage of contract and staff lawyers over the next 10 years. Two-thirds said they would “de-equitize” current equity partners or promote more into nonequity partner positions.
