Hildebrandt Sees Economic Downturn for Law Firms in 2008
In its first downbeat client advisory in 10 years, Hildebrandt warns that law firms are in an economic downturn that has not been accompanied my the usual upturns in litigation, bankruptcy or reorganization. See below for info about the upcoming Webinar: Business Development in a Down Market
It cites:
- The precipitous drop off in structured finance work triggered by the sub-prime mortgage crisis.
- A decline in M&A and transaction work.
- A drop-off in litigation, particularly in Texas and California, based on new federal court case filings in many areas of law.
- Work once thought to be complex, like project finance, is now viewed as routine and is priced accordingly.
- Corporate procurement departments are getting involved in hiring law firms, and demanding rate freezes or discounts.
- There were 19 reported dissolutions of law firms in the US in 2007, up from the 9 reported in 2006. "We may well see a further upturn in that number during 2008."
The recession began in the third quarter of 2007, according to the report, to which Citi Private Bank also contributed. Here's what's ahead:
- There will be cuts in marketing budgets. "In periods of economic downturn, there is always a temptation to cut expenses,and the first expenses to be trimmed in many law firms relate to marketing and client relations. While we believe that some marketing and branding efforts have been misguided and highly wasteful, a period of economic slowdown is, in our view, precisely the wrong time to be trimming marketing and client relations budgets. As noted below, the competition to win and keep clients is intensifying notwithstanding the downturn, and firms would be well advised not to be “penny wise and pound foolish” in this area.48% of new partners among AmLaw 200 firms over the last 7 years have been laterals. "History has shown that in tough times it is often the laterals who bolt for the door first," the report states.
- Firms will be looking to weed out low-performing non-equity or "income" partners. According to the report, associates work the most hours (roughly 1770 hours a year), followed by partners (1732 to 1,666 hours), with Income partners bringing up the rear with 1,600 hours a year.
- Firms that grew too far or opened too many office will have to make painful cutbacks. In 2007, there was an 11% increase in the total number of lawyers practicing in foreign offices of NLJ 250 law firms -- 15,231 in 2007 compared with 13,707 in 2006.
"We believe it would be prudent for leaders and managers of law firms to assume that the current economic slowdown is likely to have a detrimental impact throughout 2008," the report concludes.
Don't miss the upcoming Webinar: Business Development in a Down Market
Once thought to be recession-proof, the legal profession is now in a downturn that will including a drop in profits per partner, declining spending for legal services by corporations and attorney layoffs. CMO Sara Kraeski, Esq. reveals 10 of her strategies to survive -- and thrive.
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PRESENTED BY: |
Professional Business Development Institute |
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SPEAKER(S): | Sara Kraeski, Director of Business Development, Davis Graham & Stubbs; Larry Bodine, Esq., and Michael Cummings |
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DATE: | February 26, 2008; 12PM - 1PM Central Time |
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MORE INFO: |
CONTACT: Program Director Laura Kresich; (Tel) 773-966-9273 or Lkresich@LawMarketing.com |
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WEBSITE: | http://tinyurl.com/yraaap |
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Once thought to be recession-proof, the legal profession is now in a downturn that will including a drop in profits per partner, declining spending for legal services by corporations and attorney layoffs. CMO Sara Kraeski, Esq. reveals 10 of her strategies to survive -- and thrive.
I think like in any industry that this will depend - Personally I disagree that this will be the case in several specialties
Employment - recessions and bad economy will bring many more employment lawsuits
Bankruptcy, Taxes, Fraud and Financial industries. There is a lot of fraud to be expected with recessions, and the rest kinda speak for themselves.
These are the ones that are on the top of my head, but, I say, that definitely there are several specialties that can and will capitalize on this downturn, if they are "smart"