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Law Firms See Slow Growth for First Half of 2013
Law firms are seeing sluggish and anemic growth in the first half of 2013. According to a Wells Fargo survey. 120 firms were polled to calculate different metrics like revenue, profit, billable hours, etc., from January to June relative to 2012’s report. The numbers have fallen behind estimates. One critical finding was that while gross revenue rose by 1.5 percent, the average hours per lawyer fell by 2.5 percent, according to the AmericanLawyer.
Law firms have results that span the entire range of possibilities. A certain outlier firm reports a 35% uptick while a less successful firm reports a 20 percent decline in revenues.
Rising expenses are definitely eating into profitability. The survey shoed that there was a 3.5 percent increase in overall expenses for law firms especially in technology CAPEX. Data crunching also showed that firms have “slightly more attorneys than they did a year ago, and have compensation obligations that are 2.5 percent higher.”
With the industry facing sluggish growth, intern class sizes and graduate batches joining firms will be smaller as firms trim the fat to stay competitive. The Wells Fargo survey also found that on average, capital per equity partner increased to around 2 percent, to $300,000, and that at this point, law firms in general are decreasing their reliance on debt.