The latest quarterly survey from Citigroup is in, and things aren’t looking good for law firms. The Citi Private Bank of Citigroup has reported that the slight increases in revenue of law firms in the first half of 2012 have been submerged in the increasing expenses.
Citi Private Bank bases its survey on studying the 600 plus U.S. and U.K. firms it provides services to, and the 35,000 individual lawyers who work with them.
Gretta Rusanow, the senior client adviser in the Citigroup Business, as reported by Bloomberg.com, stacked up the 2.7 increase in the firm’s revenue against the 2 percent increase in compensation expenses and the 5.5 in operations expenses (rent, insurance, technology upgrades, etc.).
“It doesn’t matter what end of the market you’re sitting in,” said Gretta, “Demand is down. And no one is immune…. there will be a struggle to achieve even the low single digit profit growth we predicted at the start of the year. We’re concerned.”
The concern is that 2012 won’t even be able to match 2011, which in itself was a poor year, with low single-digit profit growth. The demand at the end of the second quarter slowed even lower than the slow level it has been at in 2012; the head count growth slowed, but not enough to match the slow growth in demand; this lead productivity declines and declines in billable hours.
The trajectory on the rest of 2012, based on its current situation, does not look promising.