Why BigLaw Didn't Pay Spring Bonuses
The numbers aren’t promising: Law firm expenses grew faster than revenue during the first half of 2012, according to the latest survey by Citi Private Bank.
The survey of 176 law firms, most of them among the country’s largest, found revenue growth of 2.7 percent, report Bloomberg News and an Am Law Daily article by Citi Private Bank executives. Meanwhile, compensation expenses rose by about 2 percent and operating expenses by 5.5 percent, according to Bloomberg.
“Based on our read of the results for the first half of 2012,” write Dan DiPietro and Gretta Rusanow of Citi Private Bank’s law firm group, “we’re now concerned that this year the legal industry may be unable to match 2011’s low single-digit profit growth.”
A 1.1 percent growth in lawyer headcount exceeded the .3 percent increase in demand for lawyer services. “As a result, productivity declines accelerated, driving billable hours down even further than the historically low numbers we’ve seen postrecession,” write DiPietro and Rusanow.
Law firms managed to avoid layoffs however, according to Rusanow. Instead, firms cut compensation costs by doing away with spring bonuses, she tells Bloomberg.