Legal News

Heading Into 2008, Managing Partners Are Glum

By Peter Lattman

The Law Blog is jealous of all those fancy indicators our Global Economics Bureau follows, such as the Case-Shiller Home Price Index. But this morning we remembered that we have our very own indicator to follow — the Managing Partner Confidence Index, courtesy of the Citi Private Bank Law Firm Group. Click here for the four-page report. Here are some highlights:

• The MPCI Index Value of 108, down 11 points from prior quarter, indicates a dramatic fall in confidence in both the economy at large and the legal profession as a whole, continuing the trend seen over the past few quarters.
• Three out of five managing partners believe the economy is worse now than six months ago, while about half believe that business conditions are somewhat worse today than at mid-year.
• Profit outlook remains positive (five percent growth on average for year ahead), but expectations for individual firm profits fell sharply from third quarter.

The Index is the brainchild of Dan DiPietro, head of the Citi group. His team surveys some 100 Big Law managing partners. “Managing partners in U.S. law firms have become sharply more pessimistic in the 4th quarter about the economy and its anticipated effects on the legal industry,” concludes the study.

But does this mean more layoffs, as we explored on Friday? Unclear. Reports have yet to emerge of widespread layoffs at the nation’s big firms beyond the firings in firms that have the most exposure to the credit crunch. Earlier this week, we checked in with Dan Weiner, co-chair of personnel at Hughes Hubbard, which has no plans for associate layoffs. Weiner says that young lawyers at firms with diversified practices are safer, but the business slowdown is something firms are keeping a close eye on.

“We expect the effects of this downturn to be more like a tornado than a hurricane,” Mr. Weiner said — “localized severe damage in specific practice areas as opposed to across-the-board destruction.”

Full post as published by Law Blog - WSJ.com on January 17, 2008 (boomark / email).