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More Good News for Bay Area Law Firms

Oh wait, I meant that other adjective, "bad."

Headline: "Bay Area Firms See Profits Drop Up to 21%, Revenues Flat"

The lede: "A tanking economy and frozen credit markets struck a double blow to Bay Area-based Am Law 100 firms in 2008, causing slower revenue growth and a drop in profits, according to The Recorder, a sibling publication of The Am Law Daily."

Unfortunately, the original article requires a subscription to The Reporter. But there are interesting tidbits to glean out here. The main takeaway is that gross revenue generally increased in 2008, but not at the double-digit pace anticipated by most firms (at the beginning of the year, anyway). Increased spending to accommodate the non-materializing growth has led to a significant drop in profits per equity partner (PPP). As we know from Heller and Thelen, a collapse in partner profits can lead to a downward spiral, as rainmakers lateral to more profitable firms.

For 3Ls and 2008 grads, this probably means that there is work at bay-area firms--but not necessarily enough for the giant class of 2007 summer associate hires.

Full post as published by Nuts & Boalts on January 12, 2009 (boomark / email).