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PMI Shows Legal Services Demands Slump for Another Quarter
The Hildebrandt Institute’s Peer Monitor Index (PMI) for Q3 2012 shows a decline in the demands for legal services for another quarter following Q2. According to the PMI, after falling 0.8% the demand for legal services has now gone flat.
While expenses have slowed down amidst many factors, including law firms going all out to optimize costs and the economy taking longer than usual to recover, but still managing to hold the bottom. While capacity exceeds demand, productivity continues to fall and expenses continue to neutralize the benefits of incoming revenue. All in all, law firms continue to be in a pinch though top partners are affected negligibly.
Supporting a continuing trend in recent times, labor and employment still continues to experience growth and demand grew up to 2.5% in the third quarter. Even though for the past two-three years labor has been experiencing strong growth, the volume of growth in Q3 was the lowest in past two years. For the first time in two years, IP litigation saw a decline of 3.6%, while corporate work fell by 1.0%.
Confirming the continuing trend of clients shifting work from behemoths to smaller caring boutique law firms, while Am Law 100 saw a demand drop of 0.8%, and Am Law 200 saw a productivity drop of 3.5%, associated with headcount growing by 1.9%, midsized law firms keep faring better. In midsize firms, demand for legal services was up by 1.9% according to the PMI, and the Peer Monitor reasons the stronger demand was a result of “the best relative productivity performance” among market segments.
Source: Peer Monitor Index, Q3 2012 Executive Report – Issued 11.01.12, Hildebrandt Institute.