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Sunday, May 13, 2012

Law Firm Demand Rose Modestly in 2012 First Quarter

American Lawyer, Citibank Report Shows Modest Growth in Demand for Law Firms' Services:

There was a ray of sunshine for the law firm industry during the first quarter of 2012, as demand grew modestly, reversing the decline seen in the fourth quarter of 2011.

But there were also some dark clouds. Expense growth outpaced revenue growth even more than in 2011. And while demand growth is good news, a similar growth rate in head count meant that there was no change in the industry’s productivity numbers, which have been historically low since the recession.

Overall, revenue growth of 1.2% was driven by a 1.5% increase in demand and a moderate increase in rates. However, there were notable differences across market segments. While revenue growth was strong for Am Law 51–100 firms and firms outside The Am Law 200, Am Law 1–50 and Second Hundred firms saw virtually no growth. Demand growth was also patchy. Am Law 51–100 and Second Hundred firms saw solid demand growth, while smaller firms saw demand continue to decline. Am Law 1–50 firms saw just a 0.6% increase. Rate increases continued to grow at a similar rate to 2011, and more than in the two years prior, but still lag behind historical averages.

These results are based on a sample of 176 firms (81 Am Law 100 firms, 44 Second Hundred firms, and 51 additional firms).

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