Legal News

Happy Days at BigLaw Here Again? Only Clients Stand in the Way

By Ashby Jones

118.

Floating in a vacuum, that number — the Citi Private Bank Law Firm Group’s “Managing Partner Confidence Index” for 2009’s 4th quarter — means very little. But when stacked up against the numbers for previous quarters, it just might mean quite a bit to many LBers out there.

The 118 was the highest the Index has been dating to 2007, and represented an increase of 15 points over the 2009’s Q3 number.

The index reads:

Overall confidence recaptured 15 points, bringing this index to its highest level in two and a half years. Managing partners are confident that the worst of the recession is behind them, and are also feeling less pessimistic about financial conditions at their own law firms, largely due to a surge in anticipated demand.

Hmmm. Optimism. Really? Unemployment is at 10 percent. The Dow Jones is off nearly 400 points in the last two days. Americans can’t stand their elected leaders. Is there really reason to be optimistic?

The managing partners say yes. And that seems driven largely by the fact that they expect demand to pick up. Some 64 percent of the managing partners surveyed expect demand to grow over the next 12 months. Partly because of that, the days of mass layoffs may be coming to an end. Reads the report:

Until last quarter, however, managing partners were anticipating even more layoffs to come. But with projected demand back up to prerecession levels, it seems as if the spate of layoffs is finally at an end.

An end of layoffs is one thing. But hiring is another. For the first time in 2009, a
plurality of MPs (45%) are expecting growth in the associate pool over the next 12 months. Another 31% think the numbers will stay where they are and 17% expect a modest
drop in the associate ranks.

One big looming unknown for managing partners, according to the report, is whether a step-up in demand will lead to a corresponding step-up in revenue. The reason why one might not perfectly track the other, reads the report: “The difference is probably due to continued discounting pressure from clients. For many law firms, the road to recovery looks to be a long one.”

Clients. Those darn clients.

Full post as published by Law Blog - WSJ.com on January 21, 2010 (boomark / email).