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A study compiled by Citi Private Bank revealed that the first quarter of 2013 has been a slow one for American law firms, and while that shouldn’t necessarily be viewed as a bad sign for the coming year, firms should not expect a quick turn around in revenue.
John Wilmouth describes the results of the studies for AMLaw, and among his chief points is that while average revenues did increase for the law firms surveyed, the 0.2 percent increase in this year’s first quarter, compared to the 1.2 percent increase of 2012’s first quarter, was disappointing. Wilmouth acknowledges that first quarters for law firms are typically slow, on account of most clients pushing to have the majority of their legal work complete during the previous years fourth quarter, but says that it can be discouraging for any firm to begin a year so slowly. The final quarter of 2012 saw an increase in revenue, which indicated a weaker first quarter for 2013.
The study is based on a sample of 166 law firms, 74 of which were AM Law 100 firms, 45 were Second Hundred firms, with an additional 47 firms. Citi Private Bank’s Law Firm Group confidentially surveys firms and attorneys each quarter, with a more comprehensive survey conducted annually as part of an effort to provide a comprehensive overview of financial trends in the legal industry.
The study also indicates that the primary driving force behind what increase there was in this year’s first quarter is increasing rates for legal work by approximately 4.0 percent. Wilmouth also credits the shortening of collection cycles compared to 2012 as another factor in the increase in revenue.
The survey looked at national, international, and global firms, and found that the greater the international presence of the firm, the greater the drop in revenue, while more domestic firms had a better first quarter. However, his analysis of the data reveals that firms with a greater international presence have done a better job at putting their firm in a position that will help them be successful for the rest of 2013, due to rate increases and a lower drop in demand.
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