Two-thirds of all US law firms expect lower 2009 revenues, although the economic harm to date has mostly hurt large firms, according to a new Altman Weil survey.
Large law firms, those with more than 250 lawyers, in the major legal markets of New York, Chicago, Washington, San Francisco and Los Angeles have felt the most impact on revenue.
In those five major legal markets, large law firms’ accounts receivables collections within 90 days of billing dropped by an average of 4.2% in the third quarter of 2008, compared tolast year.
Nationwide, large law firms’ accounts receivables collections dropped by an average of 2.9% in the third quarter of 2008.
“Large and major market firms have larger clients who tend to manage money better and are probably hoarding cash if they can,” said Altman Weil’s James D. Cotterman. “Legal is not as important as the electric bill or key raw material suppliers.”
About 66% of law firms expect lower revenue next year, compared with the 26% that anticipate little or no change and 8% that look forward to higher revenue.
Half of all firms plan to make minimal or very selective hikes in billing rates next year; 14.3% plan to tie billing increases to the Consumer Price Index; and 4% plan to keep the same billing rates.
Firms responding to the survey also cited five top ways they planned to conserve cash in the near term, including: cutting operating expenses (81%); deferring capital expenditures (76%); terminating staff (51%); terminating associates (38%); and increasing partner capital (38%).
Altman Weil collected responses from 85 firms.