Law Firm Revenue Up 5.5%, Easing Profit Squeeze, Report Says
There is an upside to law firm cost-cutting, according to a bank report that finds “a few glimmers of sunshine” in the financial picture of its legal borrowers.
The report by Citi Private Bank says law firms are reporting a 5.5 percent increase in revenue for the first nine months of the year and a slight decline in expenses. The result is an easing of the profit squeeze, or, in the words of the authors, “moderating margin compression.”
Dan DiPietro and Cindy Tambourine of Citi Private Group wrote about the results in the Am Law Daily. The report also found a .1 percent improvement in demand, and said the result “suggests that countercyclical practices such as bankruptcy may have begun to kick in.”
At the same time, head count at Citi Private Bank’s borrowing law firms increased by 5.5 percent, leading to a drop of 5.1 percent in productivity, defined as average hours per lawyer.
New York law firms did worse than the industry norm while global law firms with more than 25 percent of their lawyers outside the United States continued to outperform. However, the global firms are reporting some slowdown in revenue growth and demand, the report says. “This reinforces what we’ve been hearing anecdotally about this slowdown truly going global,” the authors say.
