Law Practice Management
Most Big Law Firms Report No Unusual Problems with Credit and Collections
Posted Dec 16, 2008 8:27 AM CDT
By Debra Cassens Weiss
Big law firms haven’t yet felt the full effects of the economic downturn, according to a new survey.
Most large law firms are still on sound financial footing, according to the survey (PDF) by legal consulting firm Altman Weil. Most firms did not experience more difficulty obtaining credit, and their collections in the third quarter were the same as in 2007, Legal Times reports.
“We expected to see more distress from law firms,” Altman Weil principal James Cotterman said in a press release. “But it appears that market conditions have not yet fully hit law firm balance sheets. Where we do see some softening, it is more likely to be in large law firms with over 250 lawyers and in major legal markets, defined for the survey as New York, Chicago, Washington, D.C., San Francisco and Los Angeles.”
The November survey asked more than 700 law firms how they were dealing with economic woes. The top five answers from the 85 responding firms were: cutting operating expenses (81 percent), deferring capital expenditures (76 percent), firing staff (51 percent), firing associates (38 percent) and increasing partner capital (38 percent).
Cotterman endorsed increasing capital through partner contributions. “Those law firms whose owners invest to keep banks as minor players in the capital structure will be in a much better position to weather this storm,” he said in the press release.