Posted Jan 22, 2010 04:57 pm CST
Managing partners are becoming more confident about the economic outlook for their law firms.
A “confidence index” developed by Citi Private Bank Law Watch shows that managing partners haven’t been this confident since 2007, according to the Legal Intelligencer and the Wall Street Journal Law Blog. The index stands at 118 on a 200 point scale; anything above 100 indicates at optimistic outlook by managing partners, according to the executive summary (PDF posted by Law Blog).
“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,” the executive summary says.
About 64 percent of the managers surveyed expected demand for legal services to grow in the next 12 months. Their expectations correlate with an uptick in legal work. “Along with bankruptcy and restructuring—which have been busy since the start of the downturn—litigation is finally starting to pick up this quarter, and there’s even some activity on the transactional front,” the executive summary says.
That could mean an end to associate layoffs. Forty-five percent of the managing partners surveyed expect a growth in associate ranks, and 31 percent expect their associate numbers to remain flat. Forty-three percent of the respondents also expected to increase their equity partner ranks.
But Lisa Kohut, the director of Citi Private Bank’s law firm group in Philadelphia, wasn’t as optimistic as the managing partners about growing equity partner ranks. She told the Legal Intelligencer that few firms cut equity partners in 2009, but they may be forced to make some cuts in 2010.
The stories note another negative: Managing partners aren’t as confident about revenue increases as they are about an increase in demand. The reason is client pressure to discount fees or offer alternative billings.
“For many law firms, the road to recovery looks to be a long one,” the executive summary says.