Stay current on changes and developments in corporate law with a wide variety of resources and tools.
By Ellen Rosen
May 13 — If lawyers needed another data point that all is still not well in the legal market, a new survey provides just that.
Consulting firm Altman Weil, in its seventh annual survey of law firms, has found that market demand has returned to pre-recession levels in just 32 percent of law firms surveyed, with an additional 41 percent of firm leaders anticipating that demand will return in the next few years. One-third of the firms surveyed with 250 or more attorneys don't expect demand to return “in the foreseeable future.”
Not surprisingly, overcapacity is a problem at many firms. More than half of those participating in the survey said partners “are not sufficiently busy.” At firms with 250 or more lawyers, the number of partners who don't have enough work jumps even higher.
Overcapacity dilutes profit. As a result, 61 percent of all firms say there's a drag on profitability and 74 percent of firms with more than 250 lawyers report the same.
Eric Seeger, an Altman Weil principal and survey co-author, said eliminating overcapacity through job cuts isn't necessarily a solution.
“To truly right-size staffing levels would require getting rid of good people who sometimes are your friends,” he told Bloomberg News May 13. “Many firms are concerned that if they cut as deeply as necessary to match staffing with demand, it will come at a great cultural cost.”
Even with overcapacity, lateral hiring hasn't slowed. Seeger said that even at firms plagued by overcapacity, “hiring laterals with books of business makes sense.” Many look to such hires as a “primary growth strategy,” he added.
He said firms are realizing that lateral hiring strategies can be “risky” and slow to produce results. Consequently, firms are focusing more on acquiring small firms or considering larger-scale mergers.
The survey also found that “non-traditional competitors”—especially clients—are siphoning business from firms. Sixty-seven percent of responding firms said they lose business to in-house legal departments. Clients' use of technology, outside legal vendors and non-traditional law firms is also, in a sense, poaching law firm business.
Despite these trends, two-thirds of the 320 firms participating in the survey reported increases in gross revenue, revenue per lawyer and profit per equity partner in 2014.
With assistance from Edward Dufner and Thomas Black in Dallas
To contact the reporter on this story: Ellen Rosen in New York at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org
The survey is available at http://www.altmanweil.com/dir_docs/resource/1c789ef2-5cff-463a-863a- 2248d23882a7_document.pdf.
©2015 Bloomberg L.P. All rights reserved. Used with permission
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)